Greenback on the defensive, gold rises

Pile of gold bars

The spectre of slower US rate hikes has been helping high-yielding currencies.

The greenback was held back by Chicago Federal Reserve President Charles Evans. If inflation began to pick up, that would certainly solidify my report.

Investors should be able to better assess the future pace of rate hikes over the coming days, with Mr Evans and Mr Harker just two of nine Fed speakers this week, headlined by chair Janet Yellen on Thursday night.

As the USA economy continues to show signs of strength, Chicago Federal Reserve President Charles Evans on Monday said four rate rises from the central bank this year isn't totally out of the realm of possibility.

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In Europe, the Stoxx 600 Index rose Friday to bring its gain for the week to 1.4 percent.

The US Federal Reserve's less hawkish than expected rhetoric on interest rate rises, despite last week's policy tightening, is also hanging over the dollar.

"The previous two hikes marked cycle lows for gold, and European election uncertainty, US President Trump's foreign policies, as well as seasonal demand in India materialising in April are likely to make Q2 the strongest quarter for gold prices this year", Standard Chartered said in a note. Also yesterday, we also heard from the lone dissenter to last week's rate hike, Mr. Neal Kashkari, who said he voted against the rate hike because inflation was still below the bank's 2% target.

Gold dipped on Tuesday as a weaker dollar only partially offset a price retreat seen in Asian trading hours, after a failure to overcome chart resistance prompted speculative selling after a four-day rally. The Dollar was in a steady up-trend from early-February as we approached last week's rate decision. This is up from the same time last year, when the average thirty-year fixed mortgage rate was 3.68 percent. United States crude was down 62 cents, or 1.27 per cent, at $48.16 per barrel. However, Seoul's Kospi added 1.06% to hit an intra-day high for the year.

Although the Dutch election is over, there are still geopolitical risks in the European Union and the attention is now focused on the French presidential polls. The big worry here appears to be a Marine Le Pen win, as she's openly discussed the idea of dropping the Euro in favor of alternative monetary structures. On the chart below, we're looking at the recent move in EUR/JPY after last night's French Presidential debates.

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