Gold remained elevated for the sixth consecutive session as geopolitical tensions remain in the back of market participants’ minds. The situation between the Iraqi government and Islamic militants still remains unclear, as Iraq Prime MInister Mouri al-Maliki rejects to relinquish power to allow a formation of a national government to battle militants. The differences between Sunni and Shiite Muslims still remain at the forefront of the violence. The US dollar declined today after economic data out of the United States was much worse than expected. The final revision for the gross domestic product in the first quarter was much worse than expected, contracting 2.9 percent and indicating not all of the slowdown was contributed to the abnormal weather seen in the first part of the year. This marked the worst non-recession GDP in 58 years. Durable goods was, also, a disappointment, falling one percent versus estimated of a .1 percent contraction. May’s figure was revised down from .8 percent to .6 percent. “The dollar weakness is keeping gold supported,” said Phil Streible, a commodity broker at RJ O’Brien & Associates. Gold increased 3.3 percent last week on the Federal Reserve’s ultra-dovish stance in the FOMC minutes statement. Some traders are taking today’s GDP figure with a grain of salt, while others see this as a supplemental reason to keep rates near-zero for an extended period of time. This should help keep gold supported.
Gold futures price action has been stalling around a supply zone found near $1,321 and $1,326 per ounce, as a lack of a substantial catalyst lacks to push gold above these levels. The daily chart is showing that gold is in overbought territory, and the yellow metal is likely to trade sideways to a slight pullback to support. The 200 EMA will act as near-term dynamic support at $1,310.4, while price action resistance can be found at $1,306.8 and $1,300.40 near-term. If gold bulls can close above current resistance levels, gold will target $1,350 per ounce.