The latest jump in gold prices could be purely a technical bounce as traders, who were anticipating a much more hawkish tone from the Fed, were forced to cover their bearish positions, leading to a short covering rally. Federal Reserve Chair Janet Yellen’s hints of a slower, more gradual pace of rate increases also seems to have caught hedge fund managers by surprise.
Data showed that money managers had slashed their net long positions in gold futures by 44,058 lots to 49,835 lots for the week ending March 14th, the lowest total since January. Technical analysts expect spot gold to face resistance first at $1,237 per troy ounce, with a break above seeing prices potential gain ground towards $1,243. In the meantime, spot gold is currently trading just above $1233 per troy ounce.