Gold is again heading for $1,250 on slower US growth, fall in dollar

(July 17, 2017 - By Manoj Kumar Jain)

The precious metal last week took support at lower levels and bounced back to trade above the important resistance level of $1,225 after the US Federal Reserve chair Janet Yellen spoke about growth projections of the US economy and further increase in interest rates.

As per observation of the Fed, US economy is expanding at a slower pace and further increase in the interest rates would depend on the growth of the economy.

Reacting to the news, we saw sharp correction in the dollar index, which slipped below 96 and is currently trading around 95.22.

The US CPI index was slower than expected last month at 1.6 per cent compared with 1.9 per cent in May. Consumer spending was also slower than expected as retail sales fell by 0.2 per cent against the expectation of rise of 0.1 per cent in June.

This week’s important release of ECB meeting minutes and China’s growth data will give further direction to the gold.

On the contrary, global demand for the metal has decreased this year and ETF holding has also hit their lower levels.

Overall fundamentals are not that much strong, but in the short term, gold is heading for some sort of corrective rally, and it could extend to $1,250-1,258.

Technical view
Gold at Comex took support at $1,210 and bounced back again to trade above $1,225 level after July 3.

On weekly chart, gold is giving positive crossover above $1,231 and looking positive, which could extend rally till $1,250-1,255 this week.

In domestic market, gold is showing strength above Rs 28,000 and is heading towards Rs 28,300-28,450 level.

Investors could buy gold at around Rs 28,000, with strict stop loss below Rs 27,770 for the upside target of Rs 28,300-28,450.

On Comex, investors could buy above $1,225 add more above $1,232 for the upside target of $1,250-1,256 with the strict stop loss of $1,208.