· Gold prices stayed below the key $1,280 level on Wednesday, near a four-month trough, as better-than-expected economic readings from China lifted Asian shares and sharpened risk appetite, denting the metal’s safe-haven appeal.
Spot gold were up 0.1 percent at $1,277.32 per ounce as of 0513 GMT, after having fallen as much as 1.2 percent to $1,272.70, its lowest since Dec. 27, in the previous session.
U.S. gold futures were up 0.2 percent to $1,278.80 an ounce.
· China’s pace of economic growth in the first quarter remained steady at 6.4 percent, beating expectations of a growth rate of 6.3 percent, helped by a sharply higher factory production.
The data, which signalled that Beijing’s recent stimulus drive might be paying off, swung Asian shares higher.
· “With the (Chinese) data that we’ve got, it certainly adds a bit of a downside to gold from here,” said IG Markets analyst Kyle Rodda.
“The fact that we have broken below the key $1,280 level might make it difficult for prices to recover.”
· The metal has fallen by over 5 percent since its February high of $1,346.73 an ounce and is trading below its 50 and 100-day moving averages, which, analysts say is a sign of further weakness.
· “Signs of progress in U.S.-China trade negotiations and strong U.S. economic data have further bolstered risk appetites since the start of the second quarter,” Phillip Futures analyst Benjamin Lu said in a note.
“The precious metal looks poised to undergo a bearish correction amidst growing downside risks in the near term,” the note added.
· A gauge of investors’ interest in the metal, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to a near six-month low to 752.27 tonnes on Tuesday.
· Gold Prices May Extend Drop
XAU/USD dropped over 0.8% on Tuesday, extending its losing streak to four days which is the longest since early March. The precious metal has just barely cleared a range of support between 1285 and 1276. As such, this may open the door to further losses after the formation of a bearish Evening Star in late February. Near-term support appears to eb the rising trend line from August around 1260 at the time of this writing.
· Gold off 3.5-month lows, but bias remains bearish
The bounce from 3.5-month lows may be extended further to $1,281 (April 4 low), as the 4-hour chart relative strength index (RSI) is reporting oversold conditions with a below-30 reading at press time.
· Gold prices could move higher later this year on the back of Fed dovishness on interest rates, purchases from central banks and lingering global uncertainties, said Martin Huxley, global head of precious metals at financial services firm INTL FCStone.
Huxley told CNBC that gold could “grind higher” in the second half of the year and possibly reach $1,400 an ounce.
· GOLD TECHNICAL ANALYSIS
Gold prices finally completed the previously identified choppy Head and Shoulders (H&S) topping pattern. Near-term support is in the 1260.80-63.76 area, but the H&S formation implies a measured downside objective near 1215.00. The pattern’s neckline – now at 1281.31 – has been recast as resistance. A daily close back above that puts the 1303.70-09.12 zone back into focus.
· Elsewhere, silver gained 0.4 percent to $15.03 an ounce.
Spot platinum rose 0.6 percent, to $881.56 per ounce, while palladium also climbed 0.6 percent to $1,357.20.
Reference: Reuters, Daily FX
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