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Spot gold was down 0.6% at $1,490.10 per ounce, as of 0650 GMT, after hitting its lowest since Aug. 13 at $1,486 earlier in the session.
Bullion prices have shed nearly 5% since hitting a more than 6-year peak of $1,557 on Sept. 4.
U.S. gold futures fell 0.8% to $1,498.50 per ounce.
· Data released earlier in the day showed China’s August consumer price index (CPI) rose above expectations, while the producer price index (PPI), a key barometer of corporate profitability, contracted less than expected, urging Beijing to step up economic stimulus as its dispute with the United States intensifies.
“Globally we are seeing a shift back towards growth assets and that’s coming at the cost of the safe-havens,” said Michael McCarthy, chief market strategist at CMC Markets.
“A lot has already been factored in about the effect of the trade war on China. Better-than-expected numbers might suggest that the impact might not be as deep as many thought.”
· The trade war between China and the United States has upset markets globally since it began more than a year ago, fanning concerns of a global economic slowdown.
However, markets took heart from their decision to hold talks in early October in Washington.
· Meanwhile, U.S. Treasury Secretary Steven Mnuchin said on Monday he did not see the threat of a recession as President Donald Trump seeks to revive trade negotiations, adding that he expected a positive year ahead for the U.S. economy.
“If prices hold at $1,490, we might see gold steadying. However, gold’s short-term trend is downward. If it breaks through $1,480, it could fall to $1,425,” McCarthy said.
· Investors now await the European Central Bank’s meeting on Thursday for clues on monetary policy easing. The ECB is all but certain to introduce a package of monetary easing and stimulus measures, but markets doubt it will opt for a massive quantitative easing.
The U.S. Federal Reserve is also widely expected to cut interest rates next week.
· “A resumption in U.S.-China trade talks along with accommodative monetary policy by global central banks has renewed risk appetite for the current term,” Phillip Futures said in a note.
· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.82% to 882.42 tonnes on Monday.
· Gold technical analysis: Bearish bias strengthens with drop to one-month lows
Gold is currently trading at $1,488 per Oz, having dropped to $1,486 soon before press time. That was the lowest level since Aug. 13.
The slide to one-month low has strengthened the bearish bias put forward by the daily chart double top breakdown confirmed on Thursday and the weekly chart bearish engulfing pattern.
Also, the relative strength index (RSI) is now reporting bearish conditions with a below-50 print. The indicator has turned bearish for the first time since May.
The 5- and 10-day moving averages (MAs) are also trending south, indicating a bearish setup. All-in-all, the yellow metal risks falling to the 50-day MA, currently at $1,469.
A minor bounce may precede a drop to $1,469, as the intraday charts are reporting oversold conditions.
· Among other precious metals, platinum dropped 1.2% to $935.20 per ounce, while palladium slipped to $1,542.34. Silver fell 0.2% to $17.92 per ounce.
Reference: Reuters, FX Street