The gold market eased slightly overnight, but it held most of yesterday's gains. British Prime Minister's May's resignation was no surprise, and the pound even rallied off the news, and that could put some additional pressure on the dollar today.
Recently as many as four Fed officials have conceded that the trade tensions between the US and China could threaten economic growth, which different from more guarded comments from Fed Chairman Powell's comments earlier in the week, and this could lend support to gold.
Gold prices were slightly higher in India overnight, and that was attributed in part to a pickup in demand from jewelers.
Gold garnered safe haven buying on Thursday and rallied to its highest level in almost a week. Steep declines in equity markets in Asia and the US over trade concerns and disappointing US economic data sent buyers into the precious metals.
Another supportive factor was the June dollar index reversing lower after trading to new contract highs. After seeing a string of strong economic data last week, the market was confronted with disappointing report on April new home sales, which declined 6.9% from March against expectations for a 2.8% decline. Sales had reached their highest level since November, 2007 in March.
The change in direction for the data was welcome news to the gold bulls, who saw gold decline last week on a spate of strong numbers.
A Chinese official stated that the US needs to correct its recent "wrong actions" in order for trade talks to continue. This throws some doubt on whether Presidents Trump and Xi will be able to accomplish anything at the G20 meeting next month. The trade dispute has the potential to lend long term support to gold, but US economic data probably has to be consistently poor for gold to break out of its recent consolidation.
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