Gold continues to hold gains despite strong GDP data

Fundamental News and Triggers

  • The U.S. economy continues to defy expectations, with GDP growing strongly in the second quarter. Despite this favourable economic news, gold prices remain essentially unchanged, with the market consolidating at record levels.
  • The Bureau of Economic Analysis said that the preliminary reading of second-quarter GDP indicated the economy expanded by 3.0% between April and June, up from the earlier estimate of 2.8%. This is a rise above the 1.4% growth reported in the first quarter.
  • In addition to strong economic growth, the report includes mixed inflation figures. The GDP Price Index increased 2.5% in the second quarter, above the earlier projection of 2.3%.
  • Geopolitical concerns, political instability and strong physical buying are the supporting factors for the gold price rise.

 

Technical Triggers

  • Gold buyers must reclaim the record high of $2532 (Rs 72250) before confronting the next important hurdle at $2550 (Rs 72500). Acceptance over the latter might attempt the $2600 (Rs 75000) round barrier en route to the triangle goal of $2660 (Rs 76500).
  • On the other hand, the initial demand level for gold buyers is predicted below $2500, below which last week’s low of $2485 (Rs 71300) will be tested. A sustained breach of the latter might expose the downside to the previously indicated triangle resistance-turned-support at $2468 (Rs 70900).

 

Support and Resistance

 

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