Gold Slightly Lower On Chart Consolidation, Upbeat U.S. Data

By Paul Ploumis 19 Aug 2015  Last updated at 04:22:48 GMT

Gold ended slightly lower in US day session Tuesday. A better-than expected US housing data also led to fall in gold prices.

(Kitco News) - Gold prices ended the U.S. day session slightly lower Tuesday, on some light profit-taking pressure from recent gains and on some technical chart consolidation. A stronger-than-expected U.S. housing report also added some mild selling pressure to gold. However, there is still some safe-haven demand occurring in the gold market due to worries about China, which did limit losses Tuesday. December Comex gold was last down $2.40 at $1,116.00 an ounce. September Comex silver was last down $0.488 at $14.81 an ounce.

Gold prices dropped to the session low upon the release of an upbeat U.S. housing report Tuesday morning. While U.S. housing starts rose only 0.2% in July, the single-family component of the report showed the biggest annual rate of growth since 2007, reports said.

The Chinese stock market sold off sharply again Tuesday, with the Shanghai composite index down more than 6% on the day. This supported some safe-haven buying in gold.
Reports said the sell-off in Chinese equities came despite the People’s Bank of China intervening with a large cash injection into the financial system. China central planners have reportedly said they are going to revamp certain industries to make them more efficient, but that tanked shares in those industries.

European stock markets were also under pressure amid trader and investor risk aversion due to worries about China. U.S. stock indexes were weaker, too, Tuesday afternoon. Last week China’s central bank devalued the Chinese yuan by around 3%. The worry Chinese monetary officials have now is that capital outflows from China will occur due to the weaker yuan.

The world stock market weakness Tuesday spilled over into early selling pressure in the crude oil market, as Nymex futures prices are hovering very close to last week’s 6.5-year lows. Crude oil prices did post a mild bounce as the session progressed Tuesday. Worries about demand from China, the world’s largest raw commodity importer, have hit other commodity markets, too. Copper and aluminum prices notched fresh six-year lows on Tuesday.

The other key “outside market” on Tuesday saw the U.S. dollar index trading firmer. The greenback bulls have lost some strength the past couple weeks as trading has turned choppy and sideways.

The big data point of the trading week is likely to be Wednesday’s release of the FOMC minutes from last month’s meeting. Traders and investors will be looking for further clues on the precise timing of the expected upcoming U.S. interest rate hike. The U.S. consumer price index is also due out Wednesday and will be closely scrutinized. The CPI figure is expected to be up 0.2% in July.

The London P.M. gold fix is $1,111.45 versus the previous A.M. fix of $1,119.15.

Courtesy: Kitco News