The Week In Hindsight, 06 June 2014

Gold spent much of the last week consolidating below the $1245.00 level following the previous Friday’s decline. With developed nation leaders at the G7 summit electing, mid week, not to impose further sanctions upon Russia and a lack of major economic news from Monday through to Wednesday, Gold struggled to pare losses sustained at the close of May.

Despite a lacklustre start for the precious metal, the ECB’s crossing into uncharted territory in terms of monetary policy did prompt investors and traders into action. By the Friday close, spot prices had rebounded off of the 1257.50 level twice before retreating slightly to consolidate slightly below the $1255.00 level.

Going forward, Chinese inflation, CNY trade balance and US retail sales numbers are set to dominate the economic headlines over the days ahead. Bullish forecasts are in place for each of the releases however, any disappointments in the actual releases could see gold holding onto any gains made at the open on Monday.

In short, following some last minute price action trading closed on Friday with gold appearing biased toward the upside. Given the recent erratic performance in both Chinese and US economic fundamentals, it is likely that prices will continue to advance ahead of the week’s major economic announcements.

We see a challenge of the $1263.00 level as the most likely outcome for the first half of the week, with strong support for prices above $1245.00.