• The dollar huddled near a 10-month trough on Monday as upbeat Chinese news and the prospect of only gradual policy tightening in the U.S. sent investors piling into leveraged positions in higher yielding currencies and risky assets.
The U.S. dollar index edged up 0.1 percent to 95.278, having touched its lowest since September.
• "Investor sentiment (for gold) has improved quite dramatically over the past week, especially with the weak data out of the United States last week," said ANZ analyst Daniel Hynes. "Gold is now primed for another rally."
• Spot gold had risen 0.2 percent to $1,230.43 per ounce at 0632 GMT. U.S. gold futures for August delivery climbed 0.2 percent to $1,229.50 per ounce.
• On the technical front, gold is likely to significantly break above key resistance at the 200-day moving average near $1,230 per ounce and could even rise to the $1,250 level in the shorter term, Hynes said. "The technical bounce looks fairly solid," he said.
• Spot gold may gain further to $1,239 per ounce, as it has cleared resistance at $1,226, according to Reuters technical analyst Wang Tao.
• Among other precious metals, spot silver rose 0.5 percent to $16.02 per ounce, after hitting $16.09, the highest in over a week, earlier in the session.
Platinum was up 0.8 percent at $922.80 per ounce, after touching its highest in two weeks at $924.80
Palladium edged lower by 0.1 percent to $857.50 perounce.
• Ken Morrison, editor of the newsletter Morrison on the Markets, commented that the cool CPI data for June pressured the U.S. dollar and paves the way for gold to test first overhead resistance at $1,240, which is the downtrend line off the June high. He also pointed out that the number of open positions had been rising on a “modest” rally, even prior to the CPI report, which he described as unusual during the index roll period, which ends Friday.
“Gold has a reasonable chance of getting through $1,240 setting up an advance toward $1,250, [which is roughly a] 50% retracement of the move over the past six weeks,” he said.
• Darin Newsom, senior analyst at Telvent DTN, said that the short-term trend is higher. “Gold should have enough momentum to push to $1,240 in the near term, but the market really needs to push through the April and June double top for the bulls to really regain the upper hand,” he said.
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• Nineteen traders and analysts took part in a Kitco News Wall Street survey. Thirteen voters, or 68%, see gold prices rising by the end of next week. That is the exact same percentage as the number of Wall Street voters who were bearish as of last Friday. Meanwhile, there were three Wall Street votes for both lower and sideways, or 16% each.
The Kitco online Main Street poll resulted in 808 votes, with 394 participants, or 49%, calling for gold to climb over the next week. Another 296 voters, or 37%, said that gold will fall, while 118, or 15%, were neutral.
“Considering the CPI data we saw this morning along with retail sales, I think you will see more upside,” said Bob Haberkorn, senior commodities broker with RJO Futures, adding that this was the fourth straight month that CPI was below expectations. “The market is interpreting the data as bullish for gold and it made it look like a rate hike is less likely than it was last night.”
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