Gold is gaining strength

Gold  should lend support to the interest rate related rally, and as weakness is starting to creep into the U.S. dollar.

Data from UBS published last week showed gold positioning has been creeping higher in recent weeks.

The latest industry data also shows that retail demand for silver and gold coins has picked up strongly.

There are signs that investors seek safe place, which is positive for the precious metal.

Weakness in the dollar has also backed the move in gold. The greenback is currently trading close to seven-week lows against a basket of currencies.

The expectations of that Federal Reserve rate hike are going back and back. Janet Yellen's hope that FOMC could raise short-term interest rates this year was dashed by unforeseen developments over the next several weeks.

The U.S. Department of Labor's Bureau of Labor Statistics (BLS) said its Consumer Price Index fell by 0.2% for the month of September.

There were signals throughout the report of weakness in the energy sector, restraining inflationary pressures overall. For the month, energy prices declined by 4.7%, while gasoline prices plummeted by 9.0%.

The inflation is factor another that matters. Fed's target is 2% when the labor market returns to full employment. Long-term inflation has remained under the Fed's goal for every month over the last three years.

Jr.Trader-G.Bozhidarov