The USD index fell from 94…
Gold market overview
Gold prices posted a fourth-straight gain on Thursday reaching $1222.50 amid political uncertainty in the US and a bit dovish read on Fed’s Chair Janet Yellen’s testimony to Congress. Most analysts believe that gold’s rally was triggered by the turmoil in White House following Donald Trump Junior’s release of emails linked to his meeting with a Russian Lawyer. It was said that she wanted to convey some compromising information on Hillary Clinton, then Democratic presidential candidate, the information that would have helped the current president to gain the upper hand. All this email release story intensified the focus on whether Trump’s campaign had some collusion with Russian government or not.
White House linked drama is widely seen as cutting the offs for Trump’s pro-growth policies. Janet Yellen’s testimony was an additional catalyst for the golds’ rally. US dollar slumped significantly after the Fed Chair’s testimony. As gold and USD have the negative correlation, the precious metal surged.
In the longer term, gold may post some additional gains as demand for the bullion will be increasing. India, one of the major gold importer countries, more than doubled its purchases of gold in June amid a rush by the country’s jewelers to store up more gold ahead of a radical tax change. Indian government prepares one of the most radical tax overhaul this year. Imports will certainly decline in case of tax rate increase. At the present moment, the impact from increased Indian demand for gold is not observed. But it will be more salient once the festival season starts in mid-August (when retail purchases of gold will increase). Indians buy gold for marriages (as a gift to a couple of as a part of the bridal costume) and for other festivals.
Meanwhile, the gold is trading at $1220.45. Technically, there is a scope for extension towards $1230.95, $1248.65 levels. If the US dollar manages to regain its strength (for example, thanks to the stronger reading of CPI figures which is due tomorrow at 3:30 pm MT time), the gold prices will be hurt. It might slide towards the supports at $1.204.75 (this week low) and $1194. 25.
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