Gold poised to break $ 1280 support on US data?

Gold futures on Comex extends its downside consolidation phase in Europe, and now looks to test six-week lows of $ 1280.89, as the bid tone around the US dollar strengthens across the board amid rising rate hike expectations and Trump’s proposed tax overhaul.

The latest upward revision of the US Q2 GDP figures added to the hopes of a Dec Fed rate hike expectations, boosting Treasury yields and greenback broadly at the expense of the non-interest bearing gold. The USD index is headed back towards monthly tops reached at 93.50 levels, having found strong bids at 92.92 in the overnight trades.

Meanwhile, the yellow metal remains on track to book its biggest monthly fall this year, although it looks to close this quarter 3.5% higher, in the wake of North Korea nuke threats. In the day ahead, risk remains to the downside amid month-end/quarter-end flowing in the US dollar, while the upcoming US core PCE index and personal spending data could emerge USD-supportive.

Also, gold traders closely eye the developments around North Korea, as the Russian and North Korean officials meet in Moscow later today to discuss the North Korea crisis.

Gold Technicals

Trevellyan Ward at Faraday Research explains: “With prices now sitting on the 50% Fibonacci retracement level ($1,281), there is once again every chance that gold may indeed rally higher from here. In fact, at the time of writing, zooming into the hourly candle chart reveals that after breaking below $1,281, prices then quickly rebounded above this level. Were prices to close here, then this would see a false break pattern emerge and offer further evidence that a move higher could be on the cards.”