Gold consolidates, waiting for US data and Fed speakers

Gold prices are consolidated at the start of the week, following a bullish close on Friday as investors price in a rate cut from the Federal Reserve later this month. The price of the yellow metal continues to base and ended the North American session around 1414 and +071% higher between $1,403 and $1,417oz. Fo Friday, Gold for August delivery on Comex added $5.50, or 0.4%, to settle at $1,412.20 an ounce making for a weekly rise of 0.9% Futures. 

The higher closes have left a bullish weekly candlestick due to the weaker Dollar. However, on the kind of data we have started to see in the jobs sector and last week's inflation data, it could be a one and done scenario, especially of trade negotiations continue to find traction. 

During the week, the U.S. Consumer Price Index for June came in a touch stronger than market expectations. The headline printed at 0.1% m/m and 1.6% y/y, and core came in at 0.3% m/m and 2.1% y/y. Then, the US June PPI was firmer than expected (+0.3%m/m and +2.3%y/y ex-food and energy, est. +0.2%m/m, +2.1%y/y) - another sign that the US is not at risk of a deflationary slide. The data are hot on the heels of Fed Chair Powell’s testimony to Congress in the week where he expressed concerns that weak inflation will be even more persistent and be a drag on inflation expectations. Nonetheless, the dollar has stayed weak and gold is basing. 

For the week ahead, U.S. Retail Sales and Fed speakers will be a focus as well as trade talk headlines following the latest news: U.S. firms may get nod to restart Huawei sales in 2-4 weeks - RTRS

Gold levels

From a technical perspective, the price of the yellow metal has broken up out of the recent consolidation, extending from the recent lows of 1381 and basing now in the 1400s, although remains below the 1439 prior highs. The 20-day moving average was a support level but on a break lower, bears would target a 50% retracement of the April swing lows to late June swing highs around 1352.