Gold rallies beyond $1350 on lackluster US retail sales

Gold rose sharply above $1350 level, supported by a broadly weaker US Dollar on the back of lackluster US economic releases.

According to the government report released on Friday, US monthly retail sales stalled in July, stalling a three months of better-than-expected gains. Meanwhile, wholesale prices (PPI) posted its biggest drop since September 2015 and came-in at -0.4% in July. 

Today's disappointing data, accompanied with the dismal GDP reading for the second quarter of 2016, would now provide little room to the US Federal Reserve to go ahead and tighten its monetary policy further in 2016. The expectation triggered a broad based sell-off in the US Dollar and is benefitting dollar-denominated commodities - like gold.

Technical levels to watch

Despite of a sharp bullish spike, the yellow metal failed to clear weekly high resistance near $1357 level and hence, a follow through buying above this immediate resistance should open room for continuation of the bullish momentum immediately towards $1365-67 intermediate resistance, before aiming towards post-Brexit swing high near $1375 level.

On the flip side, 20-day SMA near $1340 now become immediate support to defend, which if broken would negate the bullish expectations and turn the metal vulnerable to resume its near-term corrective move initially towards weekly lows support near $1330 level and eventually towards its next major support near $1315-13 region.