China's GDP held steady at 6.4 per cent in the first quarter, not falling further as expected; industrial output rose 8.5 per cent in March from a year earlier, easily exceeding expectations of 5.9 per cent. Retail sales in China in March were also impressive. The figures show that the stimulus measures enacted by Chinese policy makers last year, including tax cuts and increased infrastructure spending, are bearing fruit.
Technically, after losing the important round mark of 1300 US dollars per ounce this week, international gold prices have successively fallen below 1290 US dollars per ounce and 1280 US dollars per ounce, completely giving up their gains for the year and falling 0.5 per cent on the current annual line.
Gold also fell below its 120-day moving average this week for the first time since the end of November, which will help confirm a bearish trend in the medium term. From a strategic point of view, investors holding medium-term long positions in gold should be prepared to leave if gold shows signs of further weakness in the coming days.
But investors may increase the allocation of gold.
However, at a time when gold prices continued to fall, ETF investors stopped selling and began to increase their holdings of gold slightly, and many institutions expressed their views on the future performance of gold prices.
TD Securities expects investors to increase their allocation to gold as the global economy is not yet out of trouble, even if it does not benefit from the seemingly moderate Fed in the near future.
"A lot of people in the market are frustrated by this and are thinking about which force can raise the price of gold to more than $1350 an ounce," the agency said. Even if a super-moderate Fed is not up to the job, fund managers are still interested. "
"as economic growth weakens, the central bank faces a growing risk that it may need to return to the unconventional monetary policy path, which is a factor in private asset allocation to gold and other precious metals," said TD Securities. "
Gold prices will remain within the volatility range formed in the past two years.
BMO Capital Markets analysts believe that despite the recent weakness in gold prices, the interval volatility pattern will still be maintained in the foreseeable future, and global gold ETF positions remain "relatively stable".
"it is true that some money will flow out of the gold market as the Chinese data improve," BMO said. Spot gold prices have fallen for four consecutive weeks to around $1270, down more than 5 per cent from the year's high recorded in February, but physical-backed ETF positions remain relatively stable. This shows that macro asset allocators continue to maintain some exposure to the broader risk environment, and gold is expected to continue to operate in the relatively narrow range we have seen over the past few years. "
Despite recent weakness, Todd Horwitz, chief strategist at bubbatrading.com, insists gold could rise to $1400 an ounce by the end of the year.
"We have a very reliable opportunity to bring the price of gold to ($1400)," he said. I think the stock market will face a sell-off, and some people will get nervous and return to the gold market. "
Drivers of gold demand
In the last six months, the dollar indexWith a high volatility range, many investors worry that the dollar is building heads, boosting demand for gold in emerging markets. Investment from emerging markets could help push prices higher.
In addition, the declining outlook for global economic growth and a growing number of dovish signals from the world's major central banks have created conditions for increased demand for safe-haven assets. The price of gold has risen 5.2% in the past six months, but Goldman Sachs Group recently predicted that the price of gold will reach $1450 next year.
Karvy Commodities's Vinod Jayakumar recently said: "the International Monetary Fund recently revised its global economic growth forecast from 3.7 per cent to 3.5 per cent, further drawing investors' attention to safe-haven assets such as gold."
Increased demand for goods in Asia
Commerzbank quoted data from the Swiss Federal General Administration of Customs as saying that Asian gold demand, although at a "historically low level", had rebounded.
In March, Switzerland exported 33. 1 tonnes of gold to Chinese mainland and Hong Kong, and 24. 2 tonnes to India. And Indian gold demand is expected to get a boost in the upcoming wedding season.
The central bank increases its gold holdings
Commerzbank quoted data compiled by the International Monetary Fund as saying that the central bank is still adding gold to its reserves, with some of the biggest buyers in March being Turkey (17 tons) and Kazakhstan (more than 5 tons).
Russia is also increasing its gold reserves. Commerzbank said: "Russia may have bought more gold in March. The relevant data will be released soon. "
The World Gold Council reported that Russia bought about 274 tons of gold bars in 2018, worth about $11 billion. In February 2019, the Russian family bought 1 million ounces of gold, accounting for about 6 per cent of world demand.
Referring to the recent sale of $400m worth of gold by the Venezuelan central bank, Todd Horwitz, chief strategist at bubbatrading.com, said investors should not take this as a sell signal because Venezuela's actions had little impact on the market.
"I think they are selling gold because they are desperately short of money," he said. I think they have run out of foreign exchange, they can't tax anyone, they don't have access to money anywhere at home, and internationally they can't sell oil, so they have to start a golden doctrine. "