Gold prices advanced on safe-haven demand following a shake in the global markets, with a weaker dollar seen as supportive. The commodity is now down more than 13% from its April peak as the dollar recovered on concerns over trade disputes between the US and China and the run-up to a Fed rate hike in September, with the precious metal having retreated 1.4% for the week, which represents its sharpest one-day loss in two weeks when the bond market was closed for the Columbus Day holiday.
The U.S. Federal Reserve raised rates three times this year and traders widely expect it to raise it once more by the end of 2018. On Wednesday, U.S. President Donald Trump continued his attacks on the central and blamed the central bank’s policy decision for Wednesday’s sharp market decline.
Gold prices traded more than 1% higher regaining the psychologically important 1200 level as a rout in global stock markets spurred by fear over increasing bond yields, slowing global growth and trade tensions bolstered safe-haven demand.
Gold prices advanced to daily highs and were trading above the psychological level of 1200 following September’s inflation data, which was released short of expectations. The U.S. Consumer Price Index rose 0.1% in September after advancing 0.2% in August, the U.S. Labor Department said on Thursday. Consensus forecasts were calling for a rise of 0.2%.
The inflation rate has been a concern for market participants, with Federal Reserve officials as well politicians these past few month, with the U.S. President Donald Trump once again criticizing the Federal Reserve during a media scrum on Tuesday, saying that central bank officials can afford to hold off on raising interest rates as there are no signs of inflation.
Gold is seen trading strongly during the New York trading session, with a stronger tone as result of the Wednesday’s sell-off in global equities, while initial weekly US jobless claims increased by 7000 to a seasonally adjusted 214 K in the week to Saturday. Consensus expectations compiled by various news organizations had called for initial claims to be around 205 K to 207 K. The government left the week’s tally unrevised at the previously reported 207 K.
Bullish Outcome: Above 1200.38 Bollinger band, look for further upside with 1211.06 and 1217.90 in extension.
Bearish Outcome: Below 1200.38 middle Bollinger band, look for further downside with 1189.70 and 1183.70 in extension.