Gold ekes out 1.3% gain on drop in dollar, Greece woes

Gold risesGold soared for a third straight session on Wednesday as the drop in the dollar and lingering concerns about Greece enhanced demand on the metal.

The yellow metal has added 1.3 percent, so far, as the dollar retreated against a basket of major currencies, boosting demand on the metal as an alternative investment.

The dollar index tumbled to a low of 94.29, after opening today’s trades at 95.10, on worries from U.S. officials about the strong dollar impact on the economy.

Investors will focus on Thursday’s U.S. retail sales data for May to gather clues about the strength of the economy, following the release of upbeat nonfarm payrolls report last week that reflected the progress in the labor market.

Gold finally has took advantage of the retreat in the dollar, putting some money in gold especially after the recent fall in the equity market.

From another perspective, other investors resorted to the shiny metal as a safe haven on renewed worries from Greece.

A planned meeting between German, France and Greece on Wednesday is likely not occur, as the Greek proposal sent on Tuesday failed to meet creditor’s demands, an EU official told Reuters.

As of 12:40 GMT, gold trade at $1190.75 an ounce, where it faced resistance as it set a session’s high at $1192.17.

The daily chart shows that the previously breached support has not turned into resistance to halt the metal’s rally.

The RSI 14 momentum indicator faced some resistance as it approached the 50-ceter line.

The coming resistance is located at $1198.00, which is close to the intersection between SMA 20 and SMA 50, while critical support is found at $1171.00.

Gold advances on weaker dollar fxcomment

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Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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