Gold price holds steady following previous rally, US data eyed

Otmane El Rhazi from The Bullion Desk.

The gold price was in consolidation mode during Friday’s early morning sessions, but holding above the all-important $1,200 per ounce level.

Spot gold was last at $1,218.80/1,219.5o per ounce, a $2.40 loss on the previous day’s close, but still holding around five-week highs.

Asian sessions saw good selling volumes with the discount about the same as yesterday of around $1 under spot, MKS noted, adding that most of the price action is happening in the European and New York sessions.

The gold price rallied this week following a spate of negative numbers from the US which unsettled investors, and weighed on the dollar. The dollar, which yesterday slipped to its lowest since February as it broke $1.14, remained under pressure at $1.1410.

Yesterday’s data from the US saw producer prices fall an unexpected 0.4 percent month-on-month for April, which also helped buoy the gold price.

“The decline in producer prices, thus decline in inflation, would have historically weighed on gold. However, this is currently not the case as the US Federal Reserve has stated that monetary policy is expected to remain loose as long as inflation is well-contained. Thus, the bullion market may have perceived the decline in producer prices as a sign for a delay in Fed funds rate “lift-off” expectations,” HSBC analyst James Steel said.

Still, a clearance of prices above $1,250 is needed for the market to become more confident in its bullish sentiment and a break of $1,308 is needed to change the succession of lower interim highs set since late 2012, Triland said in a note

“But the very fact that sentiment seems bullish on such a mild break at present only goes to prove how range bound this market has been, they added.

In data, Chinese foreign direct investment was 10.4 percent, but Japanese consumer confidence slipped to 41.5. Later, the US has empire state manufacturing index, industrial production, prelim UoM consumer sentiment and prelim UoM inflation expectations. 

Silver at $17.33/17.38 was slightly lower than the $17.48 of the previous close. Platinum at $1,155/1,161 was down $5 and palladium was $1 higher at $781/787.

The post Gold price holds steady following previous rally, US data eyed appeared first on The Bullion Desk.