Gold prices initially retreated despite the weaker dollar as market participants assessed the impact of the most recent tit-for-tat in the US-China trade war. Gold’s retreat has been partly triggered by profit-taking by market participants following two consecutive days of posting gains following an escalating trade tension between the US and China.

Gold futures continue to lose ground following the strengthening of the dollar, which attracted global buying interest as a safe haven from a currency crisis in Turkey, while market volatility is seen acting up in Russia.

Global markets have been in an uproar as the Financial Times reported that the European Central Bank was growing more concerns about exposure of European banks to Turkey’s woes. The Turkish lira plunged to its lowest level in a year against the greenback.

Gold prices remained chained following in line consumer inflation data last month. The US Labor Department released its US Consumer Price Index which increased to 0.2% in July following an increase 0.1% in June. Similarly, Monthly core inflation, which strips out volatile food and energy costs, rose 0.2%, following a 0.2% increase in July. Annually, inflation increased 2.4%, a tick higher from the previous month.

The housing cost was the main contributor to the rise in the headline index according to the report, with the shelter index increasing to 0.3% in July.

Gold 1H Chart
Gold 1H Chart

 

Bullish Outcome: Above 1219.04 Bollinger band, look for further upside with 1222.50 and 1226.50 in extension.

Bearish Outcome: Below 1219.04 middle Bollinger band, look for further downside with 1215.59 and 1211.50 in extension.