Gold modest gains above 1800, Focus on Canada inflation and US data

Earlier Wednesday, an economic report revealed that China's economy, the region's primary growth engine, hit a speed bump in August due to the Delta outbreak and supply disruptions.

In August, retail sales surged at a slower pace of 2.5% compared with July's 8.5% jump, the slowest pace since August 2020. Meanwhile, industrial production was up at the slowest 5.3% rate since July 2020.

Inflation data for the UK was also released this morning. Consumer prices increased by 3.2% on the year in August, up from 2.0% in July, which might be pushing the Bank of England to consider winding down its monetary stimulus.

All of this comes after the release Tuesday of below-expectation inflation data for August, creating even more uncertainty over when the Federal Reserve will taper assets purchases.

Following the discouraging US inflation figures, the DXY continues falling to new lows around 92.30. However, bearish moves in the dollar appear to be tempered in the near term, and a round of consolidation is likely due to steady yields, concerns about the delta and its impact on the growth outlook, safe-haven demand, and the start of QE tapering.

Bulls try to keep the ground

In the last month, gold prices have been trading in a range of 1776-1830. The bullish traders would be encouraged by the strength of the dollar above 1,800. If buying activity remains above 1,810, gains would continue to be positive in the near term. If so, the gold might resume its upward trend toward the 1,830 zone of firm resistance. A strong break of this barrier could push the price to 1868.

A support area between 1,800 and 1,795 is now protecting the downside before the strong support levels at 1,776.

Events of today

Traders now await Canada inflation and US economic data due to be released later today. Canada CPIs come at 15:30:00 EEST with US export and import indexes.

Investors will watch monthly industrial production growth at 16:15 and EIA crude inventories report at 17:30.