Gold prices pulled back from a more than two-month high on Thursday as traders paused after a recent rally, although RHB Investment Bank Bhd (RHB Research) maintained a bullish outlook on the precious metal.
Spot gold fell 0.8% to US$4,374.03 an ounce by 0733 GMT, after rising about 1% earlier in the session to its highest level since June 5. US gold futures for December delivery also slipped 0.8% to US$4,430.80.
The retreat came as markets awaited US producer price data for further clues on inflation and the Federal Reserve’s interest-rate path. Traders have sharply reduced expectations of a September rate hike, with the probability now at around 40%, compared with about 54% a week earlier.
US consumer prices rose 3.4% year-on-year in July, easing from 3.5% in June and coming in line with economists’ expectations. Softer inflation and weaker economic data have supported gold by reducing expectations for higher interest rates, which lowers the opportunity cost of holding the non-yielding asset.
Gold has gained more than 8% so far this month, according to Reuters.
Despite Thursday’s pullback, RHB Research said the technical picture remained firmly bullish after COMEX gold extended its upside movement in the previous session.
The commodity gained US$26.10 to close at US$4,434.30 on Wednesday, strengthening its position above the US$4,400 breakout level. It opened at US$4,396.90, touched an intraday low of US$4,389.20 before climbing to a high of US$4,469 and settling at US$4,434.30.
“Maintain long position,” RHB Research said, adding that the latest positive price action indicated that bullish momentum was accelerating.
The research house expects COMEX gold to continue its upward trajectory towards US$4,650. Should profit-taking emerge, the precious metal is expected to find support around US$4,300.
RHB Research recommended traders maintain the long position initiated at US$4,273.30, based on the August 5 close. It also revised its stop-loss threshold higher to US$4,300 from US$4,100 to manage downside risk.
The next support levels are at US$4,300 and US$4,100, while resistance is seen at US$4,650 followed by US$4,900.
Elsewhere, spot silver fell about 0.9% to US$64.73 an ounce, while platinum declined 1.5% to US$1,729.93 and palladium dropped 1.8% to US$1,345.37.
On the geopolitical front, the US and Iran also remain deadlocked over efforts to reach a permanent agreement to end the war in the Gulf, adding another layer of uncertainty for investors.
