24 Jul 2015
Gold ignores weak economic data, drops 1% on strong USD
FXStreet (Mumbai) - Gold prices fell more than 1% on Friday, tracking the strength in the USD index, while ignoring the weak private sector activity reports in China and across the Eurozone.
Has Gold lost its safe haven appeal?
The weakness in the metal today indicates that the yellow metal has lost its safe haven appeal and remain solely focused on the rate hike expectations in the US and the resulting movement in the USD index.
The preliminary Chinese Caixin PMI dropped to a 15-month low in July. A similar gauge of activity in Germany fell to a two-month low, while the aggregate Eurozone PMI also weakened to two-month low. Despite the slowdown in the activity, the metal failed to strengthen; as it used to prior to Q1 2015.
Moreover, the metal now only reacts to the movement in the USD index. The USD strengthened 0.31% against the basket of currencies today, thereby pushing gold lower by 1.1% to USD 1082.10/Oz. Given the absence of a first tier economic data release in the US, the metal could continue to track the movement in the USD index.
Gold Technical Levels
The immediate support is seen at 1080.67 on the hourly chart, followed by a major support at 1073.10/Oz (previous session’s low). On the other hand, resistance is seen at 1092.88 (hourly 50-MA) and 1100.
Has Gold lost its safe haven appeal?
The weakness in the metal today indicates that the yellow metal has lost its safe haven appeal and remain solely focused on the rate hike expectations in the US and the resulting movement in the USD index.
The preliminary Chinese Caixin PMI dropped to a 15-month low in July. A similar gauge of activity in Germany fell to a two-month low, while the aggregate Eurozone PMI also weakened to two-month low. Despite the slowdown in the activity, the metal failed to strengthen; as it used to prior to Q1 2015.
Moreover, the metal now only reacts to the movement in the USD index. The USD strengthened 0.31% against the basket of currencies today, thereby pushing gold lower by 1.1% to USD 1082.10/Oz. Given the absence of a first tier economic data release in the US, the metal could continue to track the movement in the USD index.
Gold Technical Levels
The immediate support is seen at 1080.67 on the hourly chart, followed by a major support at 1073.10/Oz (previous session’s low). On the other hand, resistance is seen at 1092.88 (hourly 50-MA) and 1100.