Gold looks to regain $1300 post better China data

China positive sentiment renewed buying support for the bullion as the dragon nation is among the largest bullion buyer.
US data and risk events could help to provide fresh impulse through $1300.

Anil Panchal FXStreet

Gold is taking the bids around $1293.50 ahead of the European open on Monday. The yellow metal recently recovered from near $1287 level during Friday after positive news report favoring the US-China trade deal pleased the bullion buyers. The upbeat sentiment got stretched during early Monday as investors react to China’s welcome figures of purchasing managers’ index (PMI). Risk events and the US data will be in the spotlight going forward.

China is among the top gold buyers and any positive news for the dragon nation could well be reflected over the metal’s prices. With this, comments portraying constructive progress over the US-China trade negotiations by the US Treasury Secretary Steve Mnuchin were welcomed by the Gold buyers.

Recently, China’s PMI once again crossed 50.00 mark that differentiates between the contraction and an increase in the activity after a long time.

Be it NBS manufacturing PMI or its Caixin counterparts, needless to mention about the NBS non-manufacturing PMI, all of them touched multi-month highs and crossed 50.00 mark, signaling a recovery in the world’s largest industrial player.

Buyers seem happier with China news that they are giving less importance to the risk-on sentiment which should weigh on the Gold prices. The US 10-year treasury yield is currently trading up by nearly 2.5 basis points at 2.44%, signaling improvement in market risk-taking capacity.

While developments surrounding the US-China trade deal could direct near-term risk sentiment ahead of the Chinese delegates’ visit to the US, today’s retail sales and ISM manufacturing PMI from the US could also offer immediate trade direction to the yellow metal prices as they usually have an inverse relationship with the US Dollar (USD).

The US retail sales control group is likely to have grown by 0.4% from 1.1% previous expansion whereas ISM manufacturing PMI can impress greenback buyers with 54.5 figure against 54.2 earlier.

Gold Technical Analysis

The yellow metal’s U-turn from $1286 indicates brighter chances of its revisit to the $1300 round-figure ahead of challenging 50-day simple moving average (SMA) figure near $1308.

However, a downside break under $1286 might not refrain from dragging the bullion to 100-day SMA level of $1278.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.