Gold Firm As US Data Lowers Rate Hike Prospects
Gold held steady on Monday as sluggish US retail sales data on Friday lowered expectations of a near-term interest rate hike by the Federal Reserve.
Spot gold was up 0.3 per cent at $1,339.12 an ounce at 0352 GMT (9:22 a.m. in India). The metal rose as much as 1.4 per cent to a high of $1,355.80 on Friday, but ended slightly lower on profit-taking.
US gold was nearly unchanged at $1,344.40 an ounce.
US retail sales were unexpectedly flat in July as Americans cut back on purchases of clothing and other goods, signalling a moderation in consumer spending that could lessen the expectations of faster economic growth in the third quarter.
"The US macro data is very mixed and expectations of a rate hike are already priced in gold," said Helen Lau, analyst at Argonaut Securities in Hong Kong.
"The gold supply is coming back, but overall demand is not good. From now, we need more catalyst to drive the investment demand higher in order to offset the supply increase from gold miners."
The dollar was on the defensive on Monday, weighed down by the US retail sales data.
A stronger dollar discourages gold buying by making the metal more expensive in other currencies.
Summer holidays in the Northern hemisphere are also keeping gold in check, with trading thin and range-bound, said Sam Laughlin, precious meals trader with MKS PAMP Group.
"We don't expect to move too far outside of the $1,330- $1,360 range over the short term," Mr Laughlin said.
"Friday's soft US retail sales and producer prices data may provide some respite for the metal this week, however participants are pulling back their long bets, which is weighing upon rallies," he added.
Speculators cut their net long positions in COMEX gold and silver futures and options in the week to Aug.9, Commodity Futures Trading Commission (CFTC) data showed on Friday.
Spot gold may bounce up moderately to $1,342 per ounce, before retesting a support at $1,334, as suggested by its wave pattern and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1.22 per cent to 960.45 tonnes on Friday from Thursday.
Silver was up 0.5 per cent at $19.79 an ounce.
Platinum and palladium were up 1 per cent and 0.4 per cent at $1,128.20 and $686.97, respectively. Both hit their lowest in more than two weeks on Friday.