Gold prices hit a two-week high on Tuesday closing well above the 200 day moving average at 1232.7., finishing today’s session up over $8.00 to close at 1241.9. One of the reasons for the rally is the decline in the U.S. Dollar. The greenback is falling due to fading prospects of an imminent increase in U.S. interest rates and expectations of stronger demand from the physical gold market. The dollar sank to a 10-month low against a basket of currencies, making dollar-denominated metals cheaper for holders of other currencies, which could boost demand. Data from consultancy GFMS (Gold Fields Mineral Survey)shows India’s gold imports climbed to an estimated 75 tonnes in June from 22.7 tonnes a year ago. For the first half of the year imports rose to 514 tonnes, up 161 percent from a year earlier. GFMS analysts said the jump was caused by Indian consumers buying ahead of July’s increase in the goods and services tax on gold to 3 percent from 1.2 percent. Weighing on the dollar is the collapse of U.S. President Donald Trump’s efforts to deliver a new healthcare bill in a market deeply worried by the pace of America’s economic growth. Even still equity markets for now brushed off the drama in Washington instead focusing on corporate earnings with U.S. indexes holding firm. In my view seasonal buying has re-emerged due to the anticipation of increased buying from not only India but China as well. Technical levels to watch are the 50 day moving average at 1247.7 and then the 100 day at 1248.5. A close above both and the market channels up to 1259.0 basis August futures. Support comes in first at 1238.8 and below there back at the 200 day moving average at 1232.7.
