Update: Gold prints the heaviest daily gain in 11 weeks, despite recently easing from the monthly top, by the end of Thursday’s North American trading session.
After the Fed’s resistance to discuss tapering, downbeat US Gross Domestic Product figures for Q2 and other US data justified the need for tapering and propelled market sentiment.
After closing in the positive territory on Wednesday, gold preserved its bullish momentum and reached its highest level in two weeks at $1,832 before going into a consolidation phase.
On Wednesday, the greenback came under strong bearish pressure after FOMC Chairman Jerome Powell adopted a patient tone regarding the beginning of asset tapering.
Other data from the US revealed that there were 400,000 Initial Jobless Claims in the week ending July 24, compared to analysts’ estimate of 380,000.
A stronger-than-expected reading could help the USD limit its losses but the Fed seems certain that inflation will come back down eventually and the market reaction is likely to remain short-lived.
On the daily chart, the Relative Strength Index indicator rose to 60 on Thursday, suggesting that the bullish momentum is still intact and there is more room on the upside before XAU/USD become technically overbought.
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