April Gold Surges as Greenback Falls for Fifth Session

April Gold futures surged on Tuesday after the U.S. Dollar weakened for the fifth straight day. Worries about the testimony from Fed Chair Janet Yellen also helped underpin the market. Gains could be limited today if Yellen stays the course set by previous Fed Chairman Ben Bernanke. She is not expected to waver too much from the guidance set forth by the Fed’s monetary policy statement. However, if she does then look for volatility.

Technically, the main trend is up. The momentum created by the overnight rally suggests there is enough buying power to drive the market into a major 50% level at $1306.25 over the near-term. A strong stock market rallied coupled with bearish testimony from Yellen could help put in a top and trigger the start of a near-term correction. Watch for increased volatility today when the questioning of Yellen about the dismal jobs market, emerging market weakness and exit strategy starts.

March crude oil finished flat today. Technically, the market is nearing a main top at $100.79 which could be giving long investors an excuse to book profits. Fundamentally, traders are still concerned about the excess supply, but beginning to soften their stance on high inventory because of the strength of the economy. The expected break in the cold weather could help put in a top because it should lead to lower demand for heating oil. The lingering cold spell this winter helped drive up heating oil usage which lead to increased demand for crude oil. Warmer weather could give investors an excuse to book profits.

The EUR/USD finished unchanged after an early session surge. Technically, the market reached a key 50% level which led to profit-taking and fresh shorting pressure. Traders are shying away from the long side because of the bearish pre-testimony comments from Fed Chair Janet Yellen. In her comments, Yellen mentioned continuity which means the central bank is likely to continue tapering monthly monetary stimulus. This should help underpin the U.S. Dollar, making it a more attractive investment than the Euro.

The GBP/USD finished higher on Monday. The Sterling was boosted by an industry report that showed U.K. retail sales growth accelerated in January. According to the British Retail Consortium, like-for-like retail sales jumped 3.9 percent from a year earlier. This move took place on top of a mild 0.4 percent gain in December. The report also beat pre-report estimates of 0.8 percent.

Trading is light, but volatility may pick up later in the session if Yellen makes comments which waver from the Fed’s current guidance.