Gold and silver prices experienced a midday dip in U.S. trading on Tuesday, with both precious metals succumbing to downward pressure stemming from unexpectedly lackluster import and export data from China. The rally of the U.S. dollar index and a decline in crude oil prices further contributed to the dampening of metal values during the trading session. At the close, December gold was down by $9.60, settling at $1,960.50, while September silver experienced a drop of $0.437, ending the day at $22.79.
The news of China’s dismal economic data had a notable impact on global risk appetite, resulting in a retreat of market confidence. Specifically, China, the world’s second-largest economy, witnessed a steep year-on-year decline of 14.5% in its July exports—the most significant contraction since the height of the Covid-19 pandemic in February 2020. Imports also experienced a larger-than-anticipated decline of 12.4% for the same period. Given these discouraging figures, expectations of additional stimulus measures by the Chinese central bank have gained traction.
This disappointing economic news reverberated across Asian and European stock markets, both of which registered losses in overnight trading. This trend extended to U.S. stock indexes, which recorded declines during the midday trading session.
Market focus remains on significant inflation reports anticipated from both the U.S. and China later this week. The U.S. Consumer Price Index (CPI) for July is scheduled for release on Thursday, followed by the Producer Price Index (PPI) on Friday. Both indices are projected to exhibit modest increases compared to their June counterparts.
The broader market landscape witnessed a notable upswing in the U.S. dollar index. Concurrently, Nymex crude oil prices experienced a marginal decline, hovering around $81.75 per barrel. Meanwhile, the benchmark 10-year U.S. Treasury note yield was recorded at 4.014%.
From a technical perspective, the near-term outlook for December gold futures remains bearish. The daily bar chart signals the emergence of a nascent downtrend. In terms of price objectives, bulls aim to achieve a close above the sturdy resistance level at $2,000.00. Conversely, bears’ immediate objective is to push futures prices below the robust technical support at June’s low of $1,939.20. The initial resistance level is noted at the day’s high of $1,972.80, followed by this week’s peak of $1,981.70. On the downside, initial support resides at last week’s low of $1,954.50, with an additional level of support at $1,950.00.
