Gold rally, the longest in eight weeks
Wednesday's trading session witnessed another rise for the precious metal following the release of China's decision of easing rules on trading, pushed traders' demand for gold as a safe investment.
Arguments regarding gold drop suggested that low prices of gold over the past period might help spur demand on the precious metal, where global recovery's uncertainty continue to push investors to target safe investment including Gold, but improving conditions in Europe helped the European common currency to appreciate against the dollar as the US is witnessing a slowdown in economical activities.
The US economy released its income, spending and the Fed's favorite gauge for inflation; the Core PCE, where all came out flat during the month of June, signaling that income and spending will suppress activities during the second quarter of this year, and accordingly, force the economy to witness a revised growth rate in the final GDP reading. Inflation in the US is still under control where the Core PCE came out flat on the monthly scale, while on the yearly scale the index rose by 1.4%, compared with the revised previous 1.5 percent. Normally, low level of inflation push investors away from gold, as the precious metal is considered the best hedge against inflation, but uncertainty of global outlook caused investors to continue on targeting gold as a safe investment.
China's central bank released a statement yesterday allowing traders to import and export gold, in addition, allowing overseas companies more access to gold trading. The bank's stated that increase foreign members on the Shanghai Gold Exchange and will also study ways to allow foreign qualified bullion suppliers to deliver to the exchange.
The US dollar index, which tracks the performance of the dollar against a basket of currencies, inched higher on the daily scale, where the index is currently trading at 80.651, compared with the opening levels of 80.614. The index reached the highest so far at 80.691 and the lowest at 80.507.
The dollar depreciation against the euro spurred demand for gold, where gold for immediate delivery rose for the sixth consecutive trading session, reaching 1195.20 an ounce, compared with the opening levels of 1185.95 an ounce, while setting the highest at 1196.55 and the lowest at 1184.70, so far.
Gold breached the 100 MA levels at 1185.55 and ascended to breach the resistance at 1190.00, which paves the path for gold to extend its rise with targets at 1217.48. Stochastic oscillator is entering an overbought area, which might force gold to return to the support at 1185.79 as a correctional move, before extending the rise to the above mentioned targets.
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Silver traded surged in trading as it reached $18.52 an ounce, compared with the opening levels of $18.35 an ounce, the metal reached the highest at $18.60 an ounce and the lowest at $18.34 an ounce. Meanwhile, the world's most expensive metal, platinum, gained so far in today's trading by $13.0 reaching $1590.00 an ounce. Meanwhile, Palladium inclined where the metal traded $5.0 higher, at $502.00.