Gold ends marginally lower but books solid July performance

MarketWatch/Sue Chang & Rachel Koning Beals/07-31-17

Gold futures slipped marginally on Monday but closed out a solid July as the dollar headed for its fifth-straight monthly decline.

…“Gold had increased noticeably…despite what were in fact good U.S. economic data—the U.S. economy grew by 2.6% in the second quarter—because the figures also indicated declining inflation pressure. This reduces the pressure on the Federal Reserve to further hike interest rates in the near future,” said Carsten Fritsch, commodities analyst at Commerzbank.

Fritsch added that the recent rise in gold prices was driven mostly by speculation, citing two sets of data. Within Commodity Futures Trading Commission statistics, net speculative long positions were expanded from 28,900 to 73,600 contracts in the week to July 25. The increase in price after the reporting date suggests that further speculative net long positions have been built up in the meantime, he said. And, according to China Gold Association data, gold demand in China grew by 9.9% year-over-year to 545 tons in the first half of 2017.

According to Jim Wyckoff, senior analyst at Kitco Metals, gold bulls have the near-term advantage. Bulls’ next upside objective lies above chart resistance at $1,300, he said. Bears’ next near-term downside price breakout objective is a close below solid technical support at last week’s low of $1,249.40.

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