Disappointing Chinese PMI Stops Gold Slide
Today’s Spotlight Market
Gold futures were higher this morning after further data indicated that China?s economy is slowing more than previously thought .? The renewed fears that the world?s second largest economy may continue to suffer through a slow growth cycle has brought back the Gold bugs.? Traders will have plenty of US job data to mull over this week, which may give traders a better idea whether or not the FOMC will decide to raise interest rates later this month.? Strong US data could take the wind out of the sails of Gold bulls, as it would favor higher interest rates.
Fundamentals
Chinese PMI came in at 47.30 Index Points in August.? This was slightly better than the preliminary estimate of 47.10, but it was worse than the July figure of 47.80.? The large drop from June to July was unsettling for investors, who were already nervous over Chinese growth.? With the exception of February, Chinese PMI has been below 50.00 for 2015.? The Index has been sub-50 during 9 out of the past 10 months.? The spread between Gold and Silver may widen further, as Silver could see significantly lower industrial demand whereas Gold is more of a pure currency and defensive play.? Barring a panic, slumping Silver prices could drag down the Gold market.? Physical buying of Gold had picked up last week, due to the bloodbath in the equity markets.? However, physical demand remains fairly lackluster at the moment, overall, and future demand prospects are not that appealing.? The precious market has seen outside support from the Crude Oil market, which has seen a 27% rise in only 3 trading sessions.
Technical Notes? – View Today’s Chart
Turning to the chart, we see the December Gold contract rebounding from support near the 1115 level.? Prices have held above the 20-day moving average, suggesting a near-term low may be in place.? Prices have also held above the 50-day moving average, which can be seen as bullish.
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