Gold extends the rally to $1,240/oz

The ounce troy of the precious metal is extending its weekly gains on Tuesday, testing the upper end of the range around the $1,240.00 area.

Gold bid on USD-selling

Prices for the yellow metal have climbed to the highest level in the last two weeks near $1,240 backed by a persistent selling mood around the greenback. The sell-off in the buck has been intensified as of late after Republicans gave no support to the ‘Trumpcare’ bill, which still aims to replace ‘Obamacare’.

The news quickly impacted on the US Dollar Index (DXY), which plummeted to fresh YTD lows in levels last seen in September 2016 around 94.40.

In addition, Bullion found extra support on dwindling expectations of a third rate hike by the Federal Reserve, all in response to recent disappointing figures from US inflation and retail sales for the month of June. Furthermore, recent dovish comments from FOMC governors Brainard and Evans seem to add to this view.

According to CME Group’s FedWatch tool, the probability of further tightening at the meeting on December 13 is at just above 45%, based on Fed Funds futures prices.

Gold key levels

As of writing Gold is gaining 0.61% at $1,237.41 and a breakout of $1,240.21 (38.2% Fibo of $1,298.80-$1,204.00) would expose $1,247.32 (55-day sma) and then $1,249.00 (100-day sma). On the other hand, the immediate support aligns at $1,229.75 (200-day sma) seconded by $1,221.58 (10-day sma) and finally $1,204.00 (low Jul.10).