Gold prices were pushing higher on the day as the market awaits data from the U.S. economy and a Federal Reserve interest rate decision. Monthly U.S. retail sales for August are due, with the market looking for a 1% gain after last month’s 1.2%. That data will be followed by a Federal Reserve interest rate decision. The Fed are unlikely to make a move on rates, but economic projections released at the same time could be market-moving.
The Canadian economy also sees the release of its August inflation and the market expects to see a print of 0.4%. This follows the same release from the U.K. today, where a figure of 0.2% was the lowest level of CPI for four years. The Chancellor’s discount for diners and plunging air fares saw the index cut and with EU inflation in negative territory it shows that a deflationary environment still exists.
The U.S. dollar was slightly higher on Tuesday but the trend will be decided by today’s releases and we will see if gold can test the $2,000 level again. An increase in retail sales with hopeful projections from the U.S. central bank could see a drop in demand for precious metals.
Gold rallied around 10% versus the greenback since July after weakness in U.S. economic outlook and it is now an important turning point to see if the world’s reserve currency can mount a further rally, or whether we will see the downtrend resume.
Gold Price Technical Outlook
The price of gold trades at $1,967 on the day and is just below yesterday’s high near $1,970. This will be the resistance on the day with a move to $2,000 still possible if the data suits gold investors. First support comes in at $1,920 for a move to lower levels.