July 17, 2017
PRECIOUS-Gold up as prospects for slower U.S. rate hikes weigh on dollar
(Reuters) - Gold rose on Monday as investors sought higher returns in alternative asset classes as the outlook for further interest rate hikes in the United States dimmed following softer U.S. economic data last week that also pushed the dollar to multi-month lows.
The U.S. government reported on Friday that consumer prices were unchanged in June and retail sales fell for a second straight month. The soft inflation and domestic demand figures undermined arguments for the U.S. Federal Reserve to raise interest rates, with traders cutting back their bets on the likelihood of an increase in December.
The dollar was near a 10-month trough on Monday because of the fading risk of U.S. policy tightening. The U.S. dollar index was at 95.159, having touched its lowest since September.
The weaker greenback supported gold since the dollar-priced commodity was less expensive for investors buying in other currencies.
Higher U.S. interest rates limits investor demand for gold since it raises the opportunity cost of holding non-interest bearing bullion.
"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 rose 0.2 percent to $1,230.98 per ounce at 0438 GMT. U.S. gold futures for August delivery rose 0.2 percent to $1,230.20 per ounce.
Risk sentiment among investors got an added boost after Chinese economic data handily topped forecasts with second-quarter gross domestic product rising 6.9 percent from a year ago.
On the technical front, gold is likely to significantly break above the 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 a resistance at $1,226, according to Reuters technical analyst Wang Tao.
The next resistance will be at $1,239 per ounce, a break above which could lead to a further gain to $1,250.
Among other precious metals, spot silver rose 0.6 percent to $16.04 per ounce, after hitting $16.09, the highest in over a week, earlier in the session.
Platinum was up 0.4 percent at $919.25 per ounce, after touching its highest in two weeks at $924.40
Palladium fell 0.3 percent to $855.72 per ounce.