The price of gold extended downside movement on Tuesday, dragging the value of yellow metal to less than $1170 after the release of Chinese growth data. The technical bias however remains bullish because of a Higher High and Higher Low in the long run.
The commodity declined further yesterday opening the door for more weakness. GOLD continues to hold on its weakness triggered off the 1183.80 level on Oct 15 2015. On the downside, support comes in at the 1160.00 level where a break will aim at the 1150.00 level. A cut through here will open the door for move lower towards the 1130.00 level. Below here if seen could trigger further downside pressure towards the 1115.00 level.
Conversely, resistance resides at the 1190.00 level where a break will aim at the 1200.00 level. A turn above there will expose the 1215.00 level. A violation of here will turn attention to the 1230.00 level. All in all, GOLD remains biased to the downside on pullbacks.
On Monday, China’s National Bureau of Statistics reported that GDP growth grew at 6.9% for the third quarter, decelerating at the slowest pace in more than six years. It marks the slowest period of growth in the world’s second-largest economy since the first quarter of 2009 when Chinese GDP rose by 6.2%. Analysts expected third quarter GDP in China to rise by 6.8% for the three-month period ending in September.
The dismal reading could add pressure on the People’s Bank of China to introduce fresh stimulus measures following its shocking devaluation of the yuan in August. The subdued growth also exacerbates concerns that the PBOC could adjust its benchmark interest rate, while pushing lending rates down even further.