Fundamental Comment

Gold hovers near 4-month low after upbeat China GDP

Gold drops after upbeat China GDP

Gold continued to hover near its lowest level in four months on Wednesday as a better than forecast Chinese growth report gave a boost to equities at the expense of safe haven assets.

The precious metal traded slightly lower at $1275.61 an ounce, compared to the session’s open at $1276.66, set for its fifth straight daily decline.

On Tuesday, gold fell nearly 1 percent to a bottom of $1272.97, the lowest level since December 27, 2018, on strong rally in global equities.

High relevance data released on Wednesday showed the Chinese economy grew at an annual pace of 6.4 percent in the first three months of this year, defying analysts' forecasts of a slowdown to 6.3 percent.

The upbeat report added to optimism, pushing Asian shares higher, where the Shanghai Composite Index closed 0.29 percent up at the highest level in 13 months.

The dollar plunged to 96.54 after all 12 of the U.S. Federal Reserve’s regional banks supported keeping interest rates steady.

While the dollar has failed to advance this week, gold was hit by the rally in global shares that sapped the demand on refuge assets.

Gold prices, however, may find strong support at the current level, which represents 38.2 percent Fibonacci retracement to the upside trend that started on August 19, 2018. Yet, the breach of the $1275 level could trigger stronger losses.

As for other precious metals, spot silver was 0.111 percent higher at $15 an ounce, platinum gained 0.64 percent to $886.75 and palladium augmented 0.85 percent to $1,366.

European shares eased from an eight-month high hit the previous session, where the pan-European STOXX 600 index was 0.06% down by 10:25 GMT.

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