Gold prices have been gaining major ground to a near 10-week high after a report showed an unexpected decrease in US wholesale prices in July.

The US PPI fell 0.1%, which is seen as the first drop since Augst 2016 according to the Labor Department. This data reveals that inflationary pressure at the various stage of the production process is relatively stable, which could help to explain why the Fed policy makers plan to raise interest rates only gradually.

Gold has been well-supported in recent weeks as fading expectations for a third Fed rate hike this year due to weak inflation combined with deepening political turmoil in the White House boosted the appeal of the precious metal.

Gold scored its sharpest daily rise since mid-May on Wednesday as investors piled into safe haven assets amid intensifying tensions between the U.S. and North Korea.

North Korea’s state media kept up its anti-U.S. rhetoric on Thursday, saying the nation will develop a plan by mid-August to launch intermediate-range missiles at Guam, where the U.S. has a large military base.

The comments came after U.S. President Donald Trump warned North Korea that any threat to the U.S. would be met with “fire and fury”.


Bloomberg Gold 4H Chart
Bloomberg Gold 4H Chart



Gold trades in an upward trend line according to the Bloomberg 4H Chart.

If there is a continuation of the bullish momentum, the commodity could break out above 1289.80 and possibly extend more gains toward the 1308.92.

In the case of a bearish scenario, Gold could fall back toward the 1275.65and extend losses through the 1252.32.