The precious metal last week took support at lower levels and bounced back to trade above the important resistance level of $1,225 after the US Federal Reserve chair Janet Yellen spoke about growth projections of the US economy and further increase in interest rates.

As per observation of the Fed, US economy is expanding at a slower pace and further increase in the interest rates would depend on the growth of the economy.

Reacting to the news, we saw sharp correction in the dollar index, which slipped below 96 and is currently trading around 95.22.

The US CPI index was slower than expected last month at 1.6 per cent compared with 1.9 per cent in May. Consumer spending was also slower than expected as retail sales fell by 0.2 per cent against the expectation of rise of 0.1 per cent in June.

This week’s important release of ECB meeting minutes and China’s growth data will give further direction to the gold.

On the contrary, global demand for the metal has decreased this year and ETF holding has also hit their lower levels.

Overall fundamentals are not that much strong, but in the short term, gold is heading for some sort of corrective rally, and it could extend to $1,250-1,258.

In domestic market, gold can breach the Rs 28,000 level once again and we are expecting it could extend rise till Rs 28,300 and Rs 28,450 levels.

Read more at The Economic Times.