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MTS Gold Evening News 20190717
Spot gold was down 0.1% at $1,404.38 per ounce, as of 0343 GMT.
U.S. gold futures slipped 0.3% to $1,406.70 an ounce.
· “Yesterday we had positive data from the U.S., gold came down a little; but we are still expecting interest rate to be reduced by the Fed,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
Also, “the U.S. and China are not close to any resolution at this point of time and a lot of central banks continue to buy gold, particularly China, ” which is supportive for gold, he added.
· Denting the bullion’s appeal, the dollar index jumped after data showed that U.S. retail sales increased more than expected in June, adding to recent evidence that the economy is improving.
However, the data barely changed market wagers on a U.S. central bank rate cut this month. Futures are still 100% priced for a cut of 25 basis points, and imply a 27% chance of 50 basis points.
Adding to the sentiment, Fed Chairman Jerome Powell on Tuesday reiterated pledges to “act as appropriate” to keep the U.S. economy humming, in a speech that did not deviate from expectations that a rate cut is on the way.
· “The four largest central banks are set to unleash fresh stimulus in the second half of the year and gold’s bullish outlook remains intact with short-term resistance resting at the $1,500 an ounce level,” Edward Moya, senior market analyst at OANDA, said in a note.
· On the trade front, U.S. President Donald Trump on Tuesday said the United States still has a long way to go to conclude a trade deal with China, but could impose tariffs on an additional $325 billion worth of Chinese goods if it needed to do so.
· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.15% to 799.37 tonnes on Tuesday from 800.54 tonnes on Monday.
· Spot gold is biased to break a support at $1,404 per ounce, and fall to $1,387, following its failure to break the resistance at$1,421, according to Reuters technical analyst Wang Tao.
· Gold prices appear to be stuck in a holding pattern as US Treasury Secretary Steven Mnuchin intends to hold a call with Chinese officials this week, but current market conditions may keep the precious metal afloat as the Federal Open Market Committee (FOMC) is widely expected to shift gears later this month.
Will keep a close eye on the monthly opening range as the RSI falls back towards trendline support, with a break/close below $1402 (78.6% expansion) raising the risk for a move towards the July-low ($1382).
Need a break/close above the Fibonacci overlap around $1418 (100% expansion) to $1422 (23.6% expansion) to bring the topside targets back on the radar, with the first area of interest coming in around $1444 (161.8% expansion) to $1448 (382.% retracement).
· Despite some normal fluctuations in gold prices this week, bulls “have very little reason to worry,” as long as the metal continues to trend upwards, said online brokerage company ThinkMarkets.
“Some stronger U.S. economic data gave the monetary policy doves some pause on their notions of several interest rate cuts in the coming months,” said Kitco’s senior technical analyst Jim Wyckoff.
Chinese economic data is also weighing on gold this week, noted ThinkMarket’s chief market analyst Naeem Aslam.
“The People Bank of China has been providing its full support for the economy and this backing has saved the day for China … The factory output and retail sales numbers have beaten estimates and this has brought some risk on appetite among investors,” Aslam wrote on Monday.
Yet, gold bulls should not despair, according to ThinkMarkets.
“The price is still looking solid,” Aslam wrote on Tuesday. “The price is trading above the 50-day, 100-day and 200-day moving averages. This confirms that the price is trading in an uptrend and as long as the price stays above this, bulls have very little reason to worry about anything.”
The precious metal is still trading near six-year highs on dovish Federal Reserve expectations, which are unlikely to change significantly in the near-term.
“The Fed is under pressure to cut the interest rate this year in order to support inflation and this means weaker dollar,” Aslam said. “Geopolitical tensions are still high. France, Germany and the UK have increased pressure on Iran to act responsively in relation to its commitment (made back in 2015 about the international nuclear agreement).”
· Among other precious metals, silver rose 0.4% to $15.61 per ounce, hovering near a more than four-month high of $15.69 hit in the previous session.
Platinum gained 0.3% to $840.11 an ounce, and palladium was steady at $1,524.97.
Reference: Reuters, Daily FX, Kitco
