Gold Ends Above $1200 After Yellen Statement, China Data

(RTTNews) - Gold futures snapped a three-day loss to end higher Wednesday, on the back of Federal Reserve Chief Janet Yellen's statement before the Congress on interest rate hikes which analysts see as not too damaging for the precious metal.

Gold futures also found support with the dollar trending lower and some upbeat economic data from China after its manufacturing sector rebounded unexpectedly in February, rising to its highest level in four months. Gold also found further support with an increase in demand after Chinese buyers returned from their lengthy Lunar New Year holiday.

In her testimony before the Senate Banking Committee on Wednesday, Yellen said the Federal Reserve may change the language in its forward guidance indicating that policy makers will be "patient" before raising rates, which she clarified did not mean tightening as imminent.

Analysts agree Yellen's statement to be in line with minutes of the most recent Fed meeting, which evidenced reluctance in raising interest rates, although this was prior to strong job report in January. Markets expected Yellen to signal a June rate hike as an option, due mainly to the underlying strength of the jobs recovery.

Meanwhile, Greek Finance Minister Yanis Varoufakis in an interview to CNBC said his country's reform proposal presented to eurozone creditors to secure a four-month extension of its bailout program did not mean the new government has taken a U-turn on its anti-austerity stance.

The European Commission on Tuesday approved the list of reforms that Greece submitted just ahead of the expiry of the Monday midnight headline. Nevertheless, Greece is expected to furnish details of the reforms to the Commission before April end.

Gold for April delivery, the most actively traded contract, gained $4.20 or 0.4 percent to settle at $1,201.50 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for April delivery scaled an intraday high of $1,211.70 and a low of $1,200.70 an ounce.

On Tuesday, gold ended at $1,197.30 an ounce, down $3.50 or 0.3 percent, but off session lows after Federal Reserve Chief Janet Yellen's testimony before the Congress, seemingly not too damaging for the precious metal.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 771.25 tons on Wednesday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.29 on Wednesday, down from its previous close of 94.48 on Tuesday in late North American trade. The dollar scaled a high of 94.48 intraday and a low of 94.13.

The euro trended higher against the dollar at $1.1356 on Wednesday, as compared to its previous close of $1.1341 on Tuesday in late North American trade. The euro scaled a high of $1.1388 intraday and a low of $1.1335.

On the economic front, a Commerce Department report on Wednesday showed U.S. new home sales to have come in well above economist estimates in January, following a recent string of largely disappointing housing data. New home sales in January dipped by just 0.2 percent to an annual rate of 481,000 from the revised December rate of 482,000. While new home sales pulled back off the more than six-year high set in the previous month, the rate still far exceeded economist estimates of 470,000.

China's manufacturing sector rebounded unexpectedly in February with the PMI rising to its highest in four months, flash estimates from Markit Economics showed Wednesday. The HSBC flash manufacturing purchasing managers' index (PMI), rose to a four-month high of 50.1 in February from 49.7 in January. Economists expected the index to come in at 49.5.

Nevertheless, China's consumer sentiment dropped marginally in February, results of a survey by MNI and Westpac showed Wednesday. The Westpac-MNI consumer sentiment index edged down to 112 in February from 112.1 in January.

France's consumer confidence rose to a near three-year high in February, signaling the economy is pushing toward a strong recovery after a slowdown at the end of 2014. The consumer confidence index rose to 92 in February from 90 in January, data from statistical office Insee showed Wednesday. This was the highest level since May 2012, when it was also 92, and exceeded the expected score of 91.

U.K. mortgage approvals increased in January for the first time since June, the British Bankers' Association reported Wednesday. Mortgage approvals for house purchases rose to 36,394 from 35,816 in the prior month. Economists had forecast a rise to 36,000. However, approvals were 20 percent lower than last January.