Major ingredients pushing the gold price higher.
The dollar weakness is playing its part and the yellow metal is shining as a result of this. There are two major ingredients which mostly drive the price of gold. Namely the dollar weakness and geopolitical crisis. Today we are seeing both of these ingredients becoming very strong and hence the gold price is surging. The US building permits data released yesterday was scanty, and this further strengthens the evidence that the soft data was way ahead of itself.
The major mandate for the Fed to increase the interest rate is based on the condition that the health of the US economy should show resilience to a change in their monetary policy. Even though the odds are still very strong that the Fed would increase the interest rate during next month, the weakness in the dollar is something which is having its impact on the gold price. As for the geopolitical crisis, Donald Trump perhaps is facing his toughest time in the office after firing the FBI director. Investors are questioning the very element if there is any possibility of impeachment becoming a reality because certainly that would hit the confidence massively.
The precious metal is about to test its major resistance which is its 200-day moving average. The price has clearly broken the 100-day moving average which shows that the downtrend has lost steam and if the price breaks the 200-day moving average, we could easily move towards the $1271.