Gold futures are little changed this morning after ending a fourth week above $1,400 an ounce on Friday.
China posted its lowest quarterly gross domestic product growth in 27 years early Monday amid an ongoing trade war with the U.S. which has sent the yellow metal soaring in recent months as investors seek a safe-haven asset. GDP growth moderated to 6.2% in the second quarter from a year earlier, in line with Reuters estimates. Meanwhile, June industrial output and retail sales beat analysts’ estimates.
Reuters reported ahead of the release that a disappointing number would add to worries about slowing global growth and help make the case for more Chinese economic stimulus. The U.S. Federal Reserve is widely expected to cut interest rates at the end of the month.
August gold futures rose 0.9% last week to settle at $1,412.20 an ounce Friday on Comex. Currently, the August contract is $1,415.80, up $3.60.
Gold is likely to maintain its upward trend in the coming months, Andrew Addison wrote in a technical analysis published by Barron’s. The next resistance level is $1,485, he said, with $1,600 a long-term objective.
Fed Chairman Jerome Powell’s congressional testimony last week solidified expectations of a rate cut at the end of the month and sent equities through multiple milestones last week. The Dow Jones Industrial Average jumped 0.9% Friday to close at a record 27,332.03. The Standard & Poor’s 500 Index ended up 0.8%.
The CME FedWatch Tool has kept the odds of a July 31 rate cut at 100% since the Federal Open Market Committee’s last meeting in June, but sentiment about the depth of the cut has fluctuated. The tool put the odds of a 50-basis-point cut at 27.6% early Monday, compared with just 6.4% a week earlier. The likelihood of a 25-basis-point reduction has fallen to 72.4% from 93.6% the week before..
This week, investors will be looking for further indications on what the FOMC will do July 31. Powell is scheduled to speak Tuesday in Paris. In economic reports, the Empire State manufacturing survey is due out Monday, and the U.S. June retail sales report is scheduled for release on Tuesday. Retail sales are expected to be up 0.2% from the prior month, according to Bloomberg estimates, which would be the lowest pace since February.
Silver futures were up $0.093 for the August contracts at the time of this report to $15.285. They jumped 1.6% last week on Comex.
Both spot platinum and spot palladium were higher early Monday. Platinum gained 2.6% last week, while palladium slid 1.5%, but is still above the $1,550 mark.
Platinum has “upside potential” after it failed to fully participate in the rally in other precious metals in the past month, Ryan Giannotto, director of research at GraniteShares, told MarketWatch.
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