By Barani Krishnan
Investing.com - Gold longs are so desperate for a U.S. interest rate cut that any data that pressures the dollar, the yellow metal’s main rival, is being celebrated beyond its timeline.
{68|Spot gold}}, reflective of trades in bullion, traded at $1,446.05 per ounce by 3:17 PM ET (19:17 GMT), up $19.83, or 1.4%, on the day.
Gold futures for August delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $4.80, or 0.3%, at $1,428.10.
Bullion and futures of gold jumped about 1.5% on Wednesday as the dollar fell on weaker-than-expected U.S. housing data and the IMF called the dollar “overvalued”. The greenback slid again in Thursday’s session after initially holding strong on a surge in activity in the mid-Atlantic area. While there wasn’t one specific reason for the currency’s slide this time, the housing data was cited again for the dollar’s drop by analysts, who tied it to expectations for an easing by the Fed at its July 30-31 meeting.
“Gold was coming off its lows after starting the day on the back foot, following yesterday’s sharp rally,” said Fawad Razaqzada, analyst for FOREX.com in London.
“As things stand, these are good times for buck-denominated and noninterest-bearing precious metals.”
Investing.com’s Fed tool monitor showed interest rate futures traders pricing in a 65% chance of a 25-basis-point cut this month and a 35% likelihood of a 50-basis-point cut.
“The anticipation of a rate cut has really driven a lot of the momentum we’ve seen lately. If we don’t get the rate cut, gold is going to head back into $1,300,” Jeffrey Sica, founder, president and chief investment officer of SICA Wealth Management LLC said, Reuters reported.
TD Commooities said global equities were already off their highs on worries that trade wars have taken a bite into corporate earnings.
“Along with technical support at $1,400/oz has seen gold bounce higher again,” it said. “Aside from the yellow metal, momentum readings for silver and platinum appear to be gaining steam as whipsaw risks have been shaken off for now.”
Razaqzada also noted that gold’s Relative Strength Indicator, or RSI, was no longer at “overbought” levels after its recent consolidated at highs above $1,400.
“With the metal breaking out of the consolidation, a push to new 2019 highs could be on the cards, potentially as early as later today. The bulls’ next target could be the underside of the rising trend capping the prior highs, which comes in around $1460, with the psychologically-important $1500 hurdle being the subsequent objective.”