• Gold finished higher on Monday, building on its first weekly rise since early June, as recent softer economic data raised speculation that the Federal Reserve may be reluctant to raise interest rates quickly.
• Monday’s climb lifted the yellow metal above “the technically important 200-day moving average at $1,230 an ounce,” said Carsten Fritsch and the commodities team at Commerzbank.
“If it were to rise above this level in any lasting fashion, we could see technical follow-up buying,” he said in a note.
• August gold GCQ7, -0.01% climbed $6.20, or 0.5%, to settle at $1,233.70 an ounce. The settlement was the highest since June 30, according to FactSet data. Prices logged a roughly 1.5% weekly gain, after posting losses in each of the past five weeks, based on the most-active contracts.
• Bill Baruch, chief market strategist at iiTRADER said he sees “strong resistance” just above the $1,236 to $1,240 level. “I want to see a close above here for the bulls to regain the upper hand.”
• The latest rise in gold prices came as a reading of New York-area manufacturing released Monday showed a retreat in July from a two-year high. A report Friday on consumer prices had showed that inflation in June came in flat, a sign that consumer prices had trouble sustaining its upward momentum. A weaker-than-expected reading for June’s retail sales, which fell 0.2%, also signaled weakness.
The latest economic data may be viewed as providing insufficient support for the Fed to lift interest rates at least once more in 2017 and shrink its $4.5 trillion balance sheet—an act that can also serve to tighten economic conditions. Lower rates tend to be supportive for gold, which doesn’t offer a yield.
• “The longer rates stay near zero, the more crucial to market sentiment central banks become,” Adrian Ash, head of research at BullionVault, told MarketWatch. “So the more gold will swing as policymakers flip-flop on daring to raise rates.”
• On Monday, silver for September SIU7, +0.07% jumped 16.6 cents, or 1%, to $16.10 an ounce after a 3.7%gain last week.
Reference: Market Watch
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