Gold hits near 2-week high after United States data disappoints

Daily August Comex Gold

The New Zealand dollar held onto its overnight gains but was headed for a 0.8 percent weekly decline as investors await several United States economic indicators, including inflation numbers.

The greenback sank to new 10-month lows against major currencies after the US Consumer Price Index for June and retail sales for the same month fell far short of market forecasts, raising doubts about the Fed's current stance on monetary policy. China posted stronger - than - expected June trade figures, bolstering the US dollar, which advanced against a currency basket. This increased demand from foreign investors for the dollar-denominated precious metal.

Federal Reserve Chair Janet Yellen hinted on Wednesday that the Fed could slow its rate hike plans if inflation continues to run below the Fed's 2 percent target. She essentially said the US economy is healthy enough for the Fed to raise interest rates, though inflation and a low neutral rate could leave the central bank with diminished leeway. The greenback nearly touched a ten-month low after weaker economic data reduced the likelihood of an early rate hike from the Federal Reserve.

China is expected to report on Monday that its economy grew 6.8 per cent in April-June from a year earlier, cooling from the previous quarter's robust 6.9 per cent pace.

Markets, broadly, interpreted her remarks as relatively dovish, which helped gold hold the mild gains of the past few sessions, said Ilya Spivak, a currency and metals strategist at Daily FX. Economists expect inflation was 0.2 per cent in the three months ended June 30, for an annual rate of 1.9 per cent, according to the median in a poll of 15 economists surveyed by Bloomberg. Bullish earnings news could send stocks soaring which would cap any gains from a bearish CPI report and could even send gold prices lower.

India's trade deficit narrowed more than expected to $12.96 billion in June as gold imports almost halved from a month earlier, government data showed.

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