Gold holds above May low, eyes US inflation data

Gold is trading above $1214.40 (May low) in Asia and appears on track for the first weekly gain in three, especially if the US CPI and the advance retail sales number disappoints expectations. 

US inflation data awaited for Fed action

Earlier this week, Fed chief Yellen talked about readiness to adjust policy tightening path if the inflation continues to remain weak. The rate hike odds would drop sharply, leading to USD weakness and gold rally if the US CPI prints below the estimate of 1.7% y/y. The core inflation is seen rising 1.7% y/y as well. 

A better-than-expected inflation data would boost demand for the US dollars and yield another leg lower… possibly to sub-$1200 levels in gold. 

The metal traders would also keep an eye on the retail sales figure, although inflation is more likely to hog the limelight, given the Fed’s cautious outlook on price pressures. 

Gold Technical Levels

The metal currently trades around $1216/Oz. A break above $1218.36 (July 3 low) would open up upside towards $1225.77 (July 12 high) and $1230 (200-DMA). On the downside, breach of support at $1214.40 (May 9 low) could yield a sell-off to $1205.02 (July low) and $1200 (psychological level).