Gold Sticks Above $1,400

Gold Under Dollar's Pressure

Gold futures inching back up this morning after disappointing U.S. housing data. The new report showed building permits dropped to 6.1%, in June, down to its lowest level since May 2017. This follows the data released by the Commerce Dept. late yesterday showing that U.S. housing starts dropped for the second month in a row, down 0.9% in June.

Gold has recovered to the middle of its $1,400 to $1,420 trading range, after dipping near the psychological $1,400 mark.

Gold futures had slipped yesterday as the dollar advanced on a strong U.S. retail sales report. Currently, August Comex contracts are sitting at $1,411.20, but are down so far this week. They have risen for the past four consecutive weeks.

Retail sales increased 0.4% last month, beating expectations of 0.1%, Reuters reported. Households ramped up purchases of motor vehicles and other goods, the Commerce Department report showed.

In a speech Tuesday, Federal Reserve Chairman Jerome Powell reiterated pledges that the central bank would “act as appropriate” to keep the U.S. economy growing. His latest remarks were in line with his congressional testimony last week which solidified expectations of a rate cut at the end of the month and sent equities to multiple milestones in the past week.

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 31.8% early Monday, compared with 27.1% the day before. The likelihood of a 25-basis-point reduction has fallen to 68.2% from 72.9%.

The Dow Jones Industrial Average declined 0.1% Tuesday to 27,335.63, retreating from Monday’s record high. The index snapped a four-day winning streak after President Donald Trump said he could impose more tariffs on China if he wanted. The Standard & Poor’s 500 Index decreased 0.3% to 3,004.04. The Dow and S&P both opened down this morning and have yet to recover at the time of this report.

Gold clung to its 21-day moving average early Wednesday as the trade standoff between the U.S. and China and worsening relations between the U.S. and Iran weighed on the dollar, Anil Panchal wrote at FXStreet. In a technical analysis, FXStreet’s Ross J. Burland said that bullion’s staying power above $1,400 favors the bulls. Previous highs and lows at $1,410, $1,419 and $1,424 are “guarding” a $1,400 objective, he wrote.

Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.15% to 799.37 metric tons on Tuesday from 800.54 tons on Monday, Reuters reported.

Silver’s September futures jumped 2% Tuesday to $15.678 an ounce, the highest settlement for a most-active contract on Comex since February. Silver was boosted by the better-than-expected retail sales. the September Contracts have build on that rise this morning, currently sitting at $15.86.

Both spot palladium and spot platinum were lower Tuesday, but palladium is up this morning, currently at $1,549, while Platinum is at $849.


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