Gold Lower As Chinese Trade Disappoints

Gold steadied on Thursday as a recovery in the dollar pulled the metal from the previous session’s 3-1/2 month high, but remained supported by expectations that the Federal Reserve will hold off raising interest rates this year.

On Wednesday, gold made a bold move higher advancing to a near four-month high as large futures investors catch up to a turnaround in sentiment towards the metals sector and fresh indications that a limp United States economy may push the first rate hike in nine years further into the future.

Spot gold was down 0.1% at $1,183.36 an ounce at 9.30am GMT, while USA gold futures for December delivery were up $3.60/oz at $1,183.40.

Gold priced in Euros meantime hit 3-month highs above €1040, and the metal set new 4-month highs against the British Pound and Swiss Franc. Consumer inflation in China cooled more than expected in September, while producer prices extended their slide to a 43rd straight month.

Gold benefits from low interest rates that cut the opportunity cost of holding non-yielding assets. A decline for 2015 would mark the longest slump since 1998.

“Once gold gets above $1,170/oz and the 200-day moving average, it puts it on the radar for institutional investors”, Sharps Pixley CE Ross Norman said.

Strong resistance will be seen near the psychological $1,200 levels, with the possibility of even pushing higher towards $1,230-35 levels, being a strong falling trend line resistance zone. That’s where his opinion collides with Bhar, who doesn’t see the Fed’s delay as a threat to his fourth-quarter forecast of $1,050 or his 2016 outlook of $1,000.

Fawad Razaqzada, technical analyst at Forex.com, said that while he is “bullish on gold in the short term and as tempting as it might be to think that it has found a bottom, this is not the first time we have seen such a bullish-looking breakout that has ultimately proved to be a mere short-covering rally”. However, I will not be surprised if gold price breaks above it without a hitch.

The key data points in the U.S. Wednesday were the retail sales report for September and the Fed’s beige book-both of which fell into the dovish USA monetary policy camp. On 17th July 2015 the Chinese government announced that they had bought roughly 100 tons of physical gold per year, for the last 6 years. “The best thing to do is just to filter out the noise, filter out the emotion and trade gold on non- subjective indicators”.