Gold price inches up as prospects for slower U.S. rate hikes weigh on dollar

New York (July 17)  Gold prices edged up on Monday as the U.S. dollar fell to multi-month lows after the
prospect for further interest rate hikes in the United States this year dimmed following softer U.S. economic data last week.

The U.S. government reported on Friday that consumer prices were unchanged in June and retail sales declined for a second
straight month.

The soft inflation and domestic demand figures undermined arguments for the U.S. Federal Reserve to raise interest rates,
with traders cutting back their bets on the likelihood of an increase in December.            

The dollar huddled near a 10-month trough on Monday as upbeat Chinese news and the prospect of only gradual policy
tightening in the U.S. sent investors piling into leveraged positions in higher yielding currencies and risky assets. The
U.S. dollar index edged up 0.1 percent to 95.278, having touched its lowest since September.      

The weaker greenback supported gold since the dollar-priced commodity was less expensive for investors holding other
currencies.

"Investor sentiment (for gold) has improved quite
dramatically over the past week, especially with the weak data
out of the United States last week," said ANZ analyst Daniel
Hynes. "Gold is now primed for another rally."
    Spot gold had risen 0.2 percent to $1,230.43 per
ounce at 0632 GMT. U.S. gold futures for August delivery
climbed 0.2 percent to $1,229.50 per ounce.
    Risk sentiment among investors got an added boost after
Chinese economic data handily topped forecasts with
second-quarter gross domestic product rising 6.9 percent from a
year ago.        
    On the technical front, gold is likely to significantly
break above key resistance at the 200-day moving average near
$1,230 per ounce and could even rise to the $1,250 level in the
shorter term, Hynes said. "The technical bounce looks fairly
solid," he said.
    Spot gold  may gain further to $1,239 per ounce, as it has
cleared resistance at $1,226, according to Reuters technical
analyst Wang Tao.        
    Among other precious metals, spot silver rose 0.5
percent to $16.02 per ounce, after hitting $16.09, the highest
in over a week, earlier in the session.
    Platinum  was up 0.8 percent at $922.80 per ounce,
after touching its highest in two weeks at $924.80   
    Palladium edged lower by 0.1 percent to $857.50 per
ounce.