Gold Rallies to 10-Week High in Late Trading; Weaker USDX

Los Angeles (June 30)  Gold prices rallied in early afternoon trading Monday, pushing to a 10-week high as traders stepped in to buy the modest dip in prices that occurred in earlier trading. Technical buying, bargain hunting and a drop in the U.S. dollar index to a multi-week low prompted the buying interest in the yellow metal. Also, a gold-market bullish report released by the San Francisco Federal Reserve Monday may have added to the buying interest in gold. The report said U.S. interest rates will remain low for quite some time to come. August Comex gold was last up $8.00 at $1,328.00 an ounce. Spot gold was last quoted up $11.80 at $1,327.40. December Comex silver last traded down $0.022 at $21.17 an ounce.

Monday is the last trading day of the month, of the quarter and of the first half of the year. That makes it an extra important trading day from a technical perspective. It is technically significant when a market price closes out the aforementioned periods at or near a weekly, monthly or quarterly high or low close. Indeed, gold and copper prices posted a bullish monthly high close on Monday. The U.S. dollar index was poised to close at a bearish monthly low close Monday. That’s also a bullish factor for the precious metals markets.

There was more downbeat economic data from the European Union released Monday. EU inflation was unchanged in June from May, at 0.5% on an annual basis. The figure was in line with forecasts and remained at a four-year low. The European Central Bank wants to see an annual inflation rate of around 2%. The same report showed bank lending in the EU fell again, as it has done for 25 months in a row.

The market place is awaiting important economic data from China, as its purchasing managers index (PMI) is due out Tuesday. On Monday China housing prices were reported down in June. This is yet another sign of a slowing rate of growth in China’s still-booming economy.

U.S. economic data due for release Monday included the ISM Chicago business survey, pending home sales, and the Texas manufacturing outlook survey. None of that data had a big impact on the market place. It’s a holiday-shortened trading week in the U.S., what with the Independence Day holiday on Friday. The key U.S. jobs report is issued a day early this month, on Thursday. This report is arguably the most important U.S. economic data of the month. Also on Thursday will be the monthly monetary policy meeting of the European Central Bank. It will be an extra important trading day on Thursday.

The civil war in Iraq is still an issue for the market place but it has at least temporarily moved off the front burner. The oil fields in the south of Iraq have not seen their production levels curtailed by the civil war taking place in the north of Iraq. Don’t be surprised to see in the near future this matter move back into the spotlight of the market place and once again significantly impact some market prices.

Source: KitcoNews