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Gold rallies on disappointing US data; potential reversal noted
Commodity Online | July 14 2017
UPDATED 21:14:47 IST

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Gold pushed sharply higher today after data from the US showed that inflation remained steady and retail sales fell short of forecasts.

Retail Sales fell 0.2% in the previous month and core inflation declined to 1.6% on an annual basis along with a 0.2% drop in the previous month. Gold jumped to a high of $1232.05/oz from $1221.0/oz after the report. The disappointing figures today raise concerns over whether the Federal Reserve would be able to raise interest rates this year as the inflation measure – CPI is one of the key indicators the FED uses to gauge inflation, weaker than expected consumer spending also puts to doubt the FED view of a stronger economy. The dollar index fell off its highs quickly boosting bullion higher today.

CME Gold is trading at $1227.69/oz, up almost a percent currently.

On the daily charts, the yellow metal continues to remain in a bearish mode but the FED concerns of low inflation and a gradual pace of rate hike is likely to push prices higher. On the upside, a daily close above resistance at $1230.0/oz (Rs.28,020) could see early signs the bulls make a comeback and aim for $1270.00-$1290.00/oz (Rs.28,900-Rs.29,400) in the short term. On the downside, we maintain our supports at $1200.00/oz (Rs.27,300) and then further lower at $1175.00/oz (Rs.26,750) in the short term.

 

(Sam Nair is Head of Commodities Research, Celebrus Commodities Limited)

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