Gold Bounces Back As Dollar Is Down Amid Economic Data

Gold and silver trade positive on the week but in a short-lived rise as gains are fueled by temporary dollar weakness.
Mauricio Carrillo
Gold Bounces Back As Dollar Is Down Amid Economic Data
Gold Bounces Back As Dollar Is Down Amid Economic Data

Precious metals like gold and silver are trading higher on the last day of the week as investors welcomed economic data in China.

Traders are closing Dollar positions ahead of the end of the week. Any rally in gold is expected to be short-lived.

Latest economic data in the United States, China, and recently, the European Union has provided traders with reasons to believe that the so-called global economic slowdown is not that much.

Economic data shows facts, no slowdown rumors

Exports in China jumped 21.3% in March, a rebound from the 16.6% decline registered in February and a number well above of the 14.8% increase expected by the market.

Imports declined 1.8% in China in March, significantly lower than the 9.6% drop expected by market’s experts.

In Europe, Industrial production dropped 0.2% monthly in February, less than the 0.6% decline expected by the market. Same situation in the yearly figure with industrial production falling just 0.3%, not the 1.0% drop expected by market.

However, the real good news came from revisions in the previous month number with Industrial production revised up to 1.9% monthly increase in January from 1.4% previously reported.

Year over year number of January was also revised up to a 0.7% decline from the 1.1% drop initially published.

DXY down; market bets on riskier assets

The DXY is trading down on Friday as investors are selling the Greenback following economic data and profit taking before the weekend.

EUR/USD is one of the primary beneficiaries of the optimism wave as the pair cheered EU industrial production data and jumped from 1.1250 to trade as high as 1.1322, maximum since March 26.

Back to the dollar index, the unit is trading at lows since March 27 at 96.80; next support is at the 50-day moving average at 96.70. The move is pushing the metal up, but market doesn’t expect the gold rally to last much.

Gold consolidates lows

XAUUSD daily chart gold April 12

The yellow metal is trading slightly positive on Friday. Investors are closing positions ahead of the weekend and a brief weakness in the dollar index.

FX Empire analyst James Hyerczyk recommends to “look for gold prices to continue to rise until the Euro stops moving higher.” EUR/USD is trading at 2-week highs, but as the move is not due to gold strength, the XAU/USD rise is limited.

Currently, XAU/USD is trading 0.08% positive on the day at 1,293. The unit is holding above the 1,290 area, but all technical studies are suggesting that the downside move has just started.

“Gains are likely to be limited because yesterday’s economic data dampened concerns over a slowing U.S. economy,” Hyerczyk affirmed.

On the week, gold is ready to perform its first positive week in the last three, but gains seem limited after Thursday decline.

Next support for the metal is at 1,280, below there watch for the 200-day moving average at 1,250. To the upside, the unit should close above the a,310 dynamic resistance to make bulls believe.

Silver bounces at 14.90, but odds are to the downside

XAGUSD daily chart Silver April 12

Silver is trading positive on Friday amid dollar weakness and a Dead cat bounce in the metal.

The 14.90 seems to be strong support that has contained the pair twice in the last seven days, but the pair looks bearish.

XAG/USD is currently trading 0.53% at 15.05 as the pair recovered the 15.05. To retrieve the bullish mood, the unit needs a close above the 20-day moving average at 15.25.

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