XAUUSD

10:57, 18 April

Drops to 2019 Low Near $1270 as China GDP Beats Expectations

In the last week or so gold has fallen sharply from sitting just above the current key level of $1300 to fall to a new low for 2019 near $1270. Having fallen below this level a few weeks ago, gold did well to find some support and slowly climb its way back above this level however this recent drop could be telling as sellers may start to line up at the $1300 level poised to maintain pressure on gold and keep it below this level.
Earlier in February, gold was cruising along pushing to new nine month highs on the back of solid support from the key $1300 level, before crashing lower pushing through any support at the $1300 level and starting to challenge any of support at this level.


Since the highs in February, gold has reversed and formed a medium term down trend with its lower peaks and lower troughs. There has been a little bit of support at $1290 propping up gold just below the $1300 level however this recent fall has shattered that too. In late January gold enjoyed a solid push higher, breaking through resistance at $1300 and establishing a new trading range above this level. The significance of $1300 is for several weeks, gold met stiff resistance at this level, after enjoying a healthy surge higher throughout December.


The move higher in December saw gold move to a then six-month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that. The $1240 level may play a role again should gold continue to decline as it is the next obvious support level. For a couple of weeks before the push higher gold consolidated a little resting on support at $1240 after making a strong rally back towards this level, which had become significant when it offered reasonable resistance halting its climb a few months ago.


Previously, ongoing concerns over the global economy, including United States - China trade negotiations were keeping gold well supported, however now a series of more positive data has directly impacted gold sending it lower. In the latest blow to gold, China released its widely anticipated gross domestic product figure, which exceeded expectations. China reported its economy expanded by 6.4% year-on-year in the first quarter of 2019, which was slightly higher than the 6.3% that analysts polled by Reuters had expected. China’s economy also grew by 6.4% in the fourth quarter of 2018. This sequence of positive data has seen gold fall by around 5% from its February highs, which includes signs of progress in U.S.-China trade negotiations and strong U.S. economic data, which has seen market participants increase their risk appetites. It is widely believed that China's stimulus measures to support the economy are having a significant impact. On the latest set of official data, analysts attributed the generally better-than-expected performance to measures taken by Beijing. Some believe China may introduce further support measures as uncertainties surrounding trade talks have not gone away.