- $2,000 key psychological level to draw in buyers – analyst
- Dollar inches higher from 15-month low hit on Tuesday
By Seher Dareen July 19 (Reuters) – Gold prices eased on Wednesday from a 1-1/2-month high touched in the previous session, dragged by a slightly stronger dollar, even as investors bet that recent U.S. economic readings make the case for a pause in the Federal Reserve’s rate-hike stance.
Spot gold fell 0.1% to $1,976.05 per ounce by 0350 GMT, after hitting its highest since May 24 at $1,984.19 on Tuesday. U.S. gold futures were little changed at $1,980.00.
The dollar index .DXY edged higher from a more than one-year low hit on Tuesday, making gold more expensive for holders of other currencies. U.S. retail sales increased less than expected last month, rising 0.2%, against the 0.5% expected in a Reuters poll of economists.
While a 25 basis-point rate hike at the Fed’s July 26 meeting is largely expected, the U.S. central bank is “expected to retain its hawkish tone, which could pose a challenge to gold’s upside,” said Yeap Jun Rong, a market strategist at IG.
According to 106 economists polled by Reuters, the expected July 26 rate hike to the 5.25%-5.50% range could be the Fed’s last increase of the current tightening cycle.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion. “Gold prices may have to reclaim the key psychological level of $2,000 to potentially provide more conviction for buyers,” said Yeap. Meanwhile, the rise from Monday’s low of $1,945.65 looks too sharp to sustain, and the current correction could extend into a range of $1,961-$1,970, said Reuters technical analyst Wang Tao.
China said it would formulate plans to stabilise growth in 10 sectors, including auto and steel, as they face difficulties such as insufficient demand and declining revenues.
Among other metals, spot silver and platinum both fell 0.1% to $25.06 and $982.22 per ounce, respectively. Palladium fell nearly 1% to $1,306.97 after rising to its highest since June 26 at $1,325 on Tuesday.
