Gold dropped as caution prevailed in the run-up to U.S. inflation readings

Gold yesterday settled down by -0.46% at 58973 as caution prevailed in the run-up to U.S. inflation readings that could set the tone for future monetary policy. Data showed China’s consumer sector fell into deflation in July, with the Chinese central bank’s stronger-than-expected exchange-rate fixing also weighing on the U.S. dollar. 

China continues to put the world on notice that it intends to challenge the U.S. dollar’s role as a reserve currency after the nation’s central bank bought more in July, pushing its current shopping spree to nine consecutive months. The World Gold Council reported on social media that the People’s Bank of China bought 23 tonnes of gold last month. Gopaul noted that so far this year, China has purchased 126 tonnes of gold, increasing its official reserves to 2,136 tonnes. Fed Governor Michelle Bowman outlined the likely need for additional rate hikes to lower inflation to the Fed’s 2% target, while New York Fed chief John C. Williams expected that rates could begin to come down next year. A hotter-than-expected CPI number could raise the possibility of another rate hike in September. Reflecting sentiment, SPDR Gold Trust, fell to a five-month low. 

Technically market is under long liquidation as the market has witnessed a drop in open interest by -2.53% to settle at 13786 while prices are down -275 rupees, now Gold is getting support at 58829 and below same could see a test of 58686 levels, and resistance is now likely to be seen at 59238, a move above could see prices testing 59504.