Gold, Silver Down as China Data Calms Markets and Fuels Bond Yields

The data helped stabilize bond yields and, for instance, metal prices such as gold and silver, which are trading in a consolidation pattern.
Mauricio Carrillo
Gold, Silver Down as China Data Calms Markets and Fuels Bond Yields
Gold, Silver Down as China Data Calms Markets and Fuels Bond Yields

On Thursday, metals are trading in consolidation mode as markets are recovering the calm after China reported better than expected economic data that lifted bond yields.

Metals such as silver and gold are maintaining levels after the last rally; however, some experts are considering that both metals went too far too fast. Now they are trading in a mix of consolidation and profit-taking as markets conditions are more stabilized.

Copper, on the other hand, is extending its recovery from two-years lows reached on Monday. However, it remains below the 2.600 level.

The dollar index is also trading higher, mostly due to Treasury bonds stabilization. However, the unit remains capped by the 97.85 area, and it is mainly trading sideways around 97.50.

China reports a jump in exports

The National Bureau Statistics of China reported earlier in the day that exports in China jumped 3.3% in July, against the decline expected of 2.0% by market. Imports declined 5.6%, however, it was a smaller decline than the 8.3% drop expected by market.

Trade balance for China showed a surplus of $45.06 billion, above the $40.00 billion expected by market but below the %50.98 billion posted in June.

The data is showing that the U.S. trade deficit with China totaled $168.5 Billion in July, an increase of the mentioned 3.3% despite the imposed tariffs in the United States to Chinese goods.

In this framework, the Dollar Yuan is trading positive on Thursday as the Chinese government seems to have posted a floor for the USC/CNY at 7.020. Today, the pair is moving at 7.045, 0.32% positive. That means that the Yuan is today cheaper than yesterday.

The data helped stabilize bond yields and, for instance, metal prices such as gold and silver, which are trading in a consolidation pattern.

Bonds yields recover sense after falling to 3-year lows

10-Year Treasury Bonds Daily Chart

After falling briefly below 1.6% on Wednesday, 10-year Treasury yields move back above the 1.7% level on Thursday. It is an indicator that the panic about a recession is fading, but it is still there. Risk aversion remains over the market, but recent data in China has lifted the market.

The recovery in the bond yields market has pushed metals slightly down as it has also fueled the demand on riskier assets.

Gold in consolidation mode

XAUUSD daily chart August 8

Gold is trading down on Thursday as investors are digesting news from China and recoveries in Treasury bonds. The notion that the market is stabilizing has motivated traders to take profits as the metal went too far too fast.

After peaking at 1,510 on Wednesday, XAU/USD returned below the 1,500 area on Thursday where it is testing a dynamic uptrend resistance that comes from November 2018.

“A rise in global bond yields led by U.S. Treasurys and increased demand of risky assets is helping to encourage profit-taking in gold on Thursday,” F.X. Empire analyst James Hyerczyk said in a recent article.

Currently, gold is trading at 1,494, 0.44% negative on the day. Technical conditions suggest more room for the upside. But before the metal will face a consolidation phase due to overbought conditions.

Silver down below 17.00 again

XAGUSD daily chart August 8

Silver is trading down on Thursday as investors are selling its positions after the metal rallied with fierce on Wednesday. Profit-taking is all over the unit.

After peaking at 17.25 on Wednesday, the unit is now trading below the 17.00 level again amid better market conditions for riskier assets. Currently, XAG/USD is moving at 16.90, 1.15% negative on the day.

Technical conditions are robust for the upside, but Friday and the 4.0% rally performed on Wednesday is looming in the pair. Expect more declines in the short term with the 16.60 as the expected support, a level that acted as resistance before yesterday’s breakout.

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