Global macro overview for 16/10/2015:
The recent bull run in gold is clearly a result of a fundamental pricing out a Fed rate hike this year as the Fed Funds futures are now pricing in a 26.8% chance of the rate hike this year, down from 32.6% yesterday. Moreover, weaker retails sales and manufacturing surveys from Empire State and Philly Fed are both adding fuel to the fire together with stubbornly lower than projected inflation levels. Inflation and interest rates expectations are fundamental drivers of gold prices and while the odds for the Fed hike were high in the last six months, now they are off the table and gold prices are surging higher.
The technical picture of gold still favors bulls as the price is now trading $100 higher than in July 2015. The next support is seen at the level of 1170 and the resistance is seen at the level of 1191.