Gold surges to fresh multi-week tops after US GDP report

Gold finally broke out of the European session consolidation phase and surged to fresh six week tops, near $1265-66 region following the release of US growth numbers. 

According to the advance estimates, the US economy is expected to have expanded at an annualized rate of 2.6% during the second quarter of 2017, broadly in-line with consensus estimates. The disappointment, however, came from a downward revision to Q1 figures, now showing a growth of 1.2% as compared to 1.4% reported earlier. 

   •  US: Real GDP increased at an annual rate of 2.6% in second quarter of 2017

Adding to this, the Employment Cost Index slumped to just 0.5% q-o-q growth, marking the weakest reading since Q2 2015, and might have dashed hopes for any faster monetary policy tightening by the Federal Reserve. 

The same is being reinforced by a sharp retracement in the US Treasury bond yields, which was seen weighing heavily on the US Dollar and driving flows towards the non-yielding yellow metal. 

Adding to this, the prevalent bearish trading sentiment around European equities and indications of a weaker opening in the US markets further benefitted the precious metal's safe-haven appeal and collaborated to the strong up-move during early NA session.

With the key US GDP print out of the way, focus now shifts to a scheduled speech by Minneapolis Fed President Neel Kashkari, which should influence sentiment around the greenback and provide some fresh impetus for dollar-denominated commodities, including gold.

Technical levels to watch

Immediate resistance is pegged near $1270 level, above which the metal seems all set to aim towards testing its next hurdle near $1279-80 region, which some intermediate resistance near $1274 level. 

On the downside, $1260 level now becomes an immediate support to defend, which if broken could drag the commodity even below $1255 intermediate support towards testing the very important 200-day SMA support near $1250 region.