Gold price scales two-week high as dollar slides

New York (July 18)  Gold prices hit a two-week high on Tuesday as the dollar fell on fading prospects of an imminent increase to U.S. interest rates and expectations of stronger
demand from the physical market.

Spot gold was up 0.2 percent at $1,2361 an ounce by 0913 GMT, having touched $1,238.76, its highest since July 3. U.S. gold futures  rose 0.3 percent to $1,236.80.

The dollar sank to a 10-month low against a basket of currencies, making dollar-denominated metals cheaper for holders of other currencies, which could boost demand.      

"We see gold averaging around $1,300 over the third quarter," said ING commodities strategist Warren Patterson. "Indian imports are rising after the very poor year last
year. We expect that trend to continue even with the tax changes."

Data from consultancy GFMS shows India's gold imports climbed to an estimated 75 tonnes in June from 22.7 tonnes a year ago. For the first half of the year imports rose to 514
tonnes, up 161 percent from a year earlier.            

GFMS analysts said the jump was spurred by Indian consumers buying ahead of July's increase in the goods and services tax on gold to 3 percent from 1.2 percent.

Weighing on the dollar is the collapse of U.S. President Donald Trump's efforts to deliver a new healthcare bill in a market deeply worried by the pace of America's economic growth.

"The Fed is unlikely to be able to increase rates again
soon, possibly not again this year, and it will certainly not
rush to reduce its balance sheet," ICBC Standard Bank analysts
said in a note.
    However, investors are still retreating from physical gold.
Holdings of SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, slipped to 827.07 tonnes on
Monday, down from 828.84 tonnes on Friday.         
    On the technical front, resistance kicks in at
$1,245-$1,247, the 55-day and 100-day moving averages
respectively. Those are followed by $1,250, a Fibonacci
retracement level. Support is around $1,230, near the 21-day and
200-day moving averages.
    Elsewhere, silver gained 0.4 percent to $16.13 an
ounce after touching a two-week high at $16.23.
    Platinum  slid 0.2 percent to $920.24 while palladium
       ceded 0.4 percent $862.00.

Reuters