Gold Under Pressure, Tests Support at 1210

Gold has edged lower to start off the week, with a spot price of $1212.88 per ounce in Monday's European session. The metal is having trouble finding its footing against the US dollar, and has posted weekly losses for a third straight time. The pair is putting pressure on the support line of $1210. It's a quiet schedule on Monday, highlighted by Existing Home Sales.

Scottish citizens went to the polls on Thursday in a historic referendum on whether to secede from the United Kingdom. The markets had expected a very close vote, based on polls leading up to the vote. However, at the end of the day, the No side won the vote in convincing fashion, with 55% of the vote, versus 44% for the Yes side. There had been predictions of a financial downturn in the UK if Scotland had voted for independence or if the vote was extremely close. As well, a vote for to secede would have raised thorny financial questions such as what currency would be used by an independent Scotland. So, Friday morning brought a tremendous sense of relief in British political and financial circles after the final votes were counted, as the United Kingdom will remain united.

The US economy may be much more robust than that of the Eurozone, but it is also affected by weak inflation levels. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

US inflation data was worse than expected in August. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

XAU/USD 1212.88 H: 1217.90 L: 1208.19