The People’s Bank of China (PBOC) on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth.
Spot gold was down 0.5 percent at $1,196.61 an ounce at 0441 GMT. U.S. gold futures fell 0.5 percent to $1,200.50 an ounce.
· “Although the dollar index has not gained much, the decision by China might be seen by some market participants as some sign of softness as a result of the trade war, which could benefit the dollar,” said John Sharma, an economist at National Australia Bank.
The dollar was up 0.1 percent against a basket of six major currencies, as China followed an easing in domestic policy by allowing yuan to fall, though the drop was not as sharp as some had feared.
· “Maybe, the trade war is affecting China more than realised and therefore the need to ease on policy, which dampened demand for gold there,” a Singapore-based trader said.
· U.S. unemployment rate fell to near a 49-year low, as per the Labor Department’s monthly employment report on Friday, which also showed a steady rise in wages, suggesting moderate inflation pressures, that could keep the Federal Reserve on a path of gradual interest rate increases.
· Spot gold may test a support at $1,193 per ounce, a break below which could cause a loss to the next support at $1,188, while a break above $1,201 could lead to a gain into $1,207-$1,214 range, according to Reuters technical analyst Wang Tao.
· Meanwhile, spot silver fell 0.7 percent to $14.48 and palladium fell 0.3 percent to $1,066.10. Platinum inched 0.7 percent lower at $814.74 an ounce.
· Weekly Gold Forecast
Technically, the first upside barrier comes in around 1208, and that is followed by 1214-1212.40, the top of the daily Ichimoku cloud. If prices see a bullish upside breakout from the sideways trading range that has been in place on the daily chart for seven weeks, look for further upside with 1218 and 1226-1224.50 as targets. The bulls have to produce a close above 1226 to challenge the next barrier in the 1240-1235 zone. To the downside, the initial support sits in the 1196-1194 area, where the bottom of the daily cloud and the daily Tenkan-sen converge. A break below 1194 could drag prices back to 1189. Below there, the 1182-1180 area stands out as a strong technical support. If XAU/USD successfully dives below 1180, then the next stop will be 1173-1172.
· Wall Street and Main Street alike look for gold prices to rise over the next week, according to the weekly Kitco News gold survey.
Sixteen market professionals took part in the Wall Street survey. Nine respondents, or 56%, predicted higher prices by next Friday. There were two votes, or 13%, calling for lower prices, while five respondents, or 31%, were neutral or looked for a sideways market.
Meanwhile, 593 people responded to an online Main Street poll. A total of 302 respondents, or 51%, called for gold to rise. Another 196, or 33%, predicted gold would fall. The remaining 95 voters, or 16%, see a sideways market.
Reference: Reuters,DailyFX
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