Gold Price Momentum Upheld Amid Positive Economic Indicators from China

GOLD (XAU/USD) has been exhibiting an upward trend for the third successive day in the early hours of Monday’s Asian trading session. The rally is in part fueled by China’s recent economic stimulus and its robust economic data from last week, suggesting that the economic slowdown of the globe’s second-largest economy may have reached its zenith. This has been advantageous for the precious metal, which is currently priced around $1,924, marking a 0.02% increment for the day..

Concurrently, the US Dollar Index (DXY) remains stable at approximately 105.20, having slightly receded from its recent nine-month peak of 105.40. The yields from the US Treasury have witnessed a rise, with the 10-year US bond yield closely approaching 4.30% at the time of reporting. Nevertheless, significant downward adjustments in the US dollar’s value seem unlikely, given the prevailing market sentiment of caution in anticipation of the US Federal Reserve’s impending monetary policy announcement this Wednesday.

The prevailing market consensus is aligned towards the Federal Reserve maintaining the current interest rates during its September review, but with a possible rate increment still under consideration. Although no dramatic shifts are anticipated from the Federal Reserve, any inclination towards a more accommodating policy stance could catalyze a dip in the US dollar, which would conversely bolster gold’s appeal.

China’s robust economic figures also offer a tailwind to GOLD , given its standing as a principal global consumer of the metal. Data released by the National Bureau of Statistics (NBS) highlighted a notable uptick in Chinese Retail Sales for August, registering a 4.6% YoY growth, significantly outpacing the prior 2.5% figure and surpassing market forecasts. Additionally, China’s Industrial Production for August escalated to 4.5%, a jump from July’s 3.7%, outstripping the anticipated 3.9%.

Moving forward, the focal points for market stakeholders include the Federal Reserve’s Interest Rate Decision on Wednesday and the unveiling of the preliminary S&P Global PMI data for September, set for release on Friday. Both events are poised to influence the trajectory of gold’s valuation.