The dollar strengthened and expectations of a gentle landing for the sturdy U.S. economy dampened demand for gold as a safe haven yesterday, causing it to close down -0.07% at 59432. Initial claims increased only somewhat, as anticipated, but job losses were at their lowest level in almost a year and both labour prices and productivity exceeded expectations, showing that the labour market is still strong.
The ADP (NASDAQ: ADP) figures also indicated a significant increase in employment in the private sector. Separate data indicated that producer prices fell for a sixth consecutive month in June, while the decline in eurozone business activity worsened more than anticipated in July. Fabio Panetta, a member of the ECB board, favoured holding interest rates steady rather than hiking them further, claiming that “inflation risks are balanced and economic activity is weak.
” According to the World Gold Council (WGC), retail sales are being dampened by record high prices, and India’s demand for gold in 2023 may drop 10% from a year ago to its lowest level in three years. Lower purchases in the second-largest gold consumer in the world may prevent a price increase worldwide. Reduced demand for gold imports may also assist to reduce the gap. Indian gold consumption decreased to 158.1 metric tonnes in the April–June quarter, a 7% decrease, as both jewellery and investment demand declined.
Technically, the market is in the midst of a long liquidation as open interest decreased by -0.32% to settle at 14874 while prices fell by 39 rupees. At the moment, gold is receiving support at 59290, and a move below that level could result in a test of 59147 levels. Meanwhile, resistance is now most likely to be seen at 59548, and a move above could result in a test of 59663 levels.
