Gold prices continued to soften in Monday morning bullion trading in Europe, maintaining the sharp reaction seen last Friday, although declines were cushioned by expectations of downside support.
The reversal last last week followed the failure of prices to break above overhead objectives, traders said.
“We attribute this to profit-taking after the price reached a four-month high of a good $1,190 just shortly beforehand – especially given that the price-rise was driven largely by speculation,” broker Commerzbank said.
Spot gold was indicated at $1,172.90/1,173.20 per ounce, down $4,10 from Friday – prices held just above $1,170 earlier after soft Chinese data continued to signal relaxed monetary policy.
“Key levels of support are seen around $1,170-1,175, but a move below the range will open up $1,150,” broker MKS said.
In the data, China’s third-quarter GDP growth at 6.9 percent beat the forecast of 6.8 percent but was lower than the second quarter’s seven percent and the slowest quarterly expansion since the first quarter of 2009.
Added to recent soft US data, the worries over China’s economy support the picture of a delay in US rate rise till next year. Market participants currently see the probability of a US rate increase in October and December at just five percent and 30 percent respectively, according to the CME Group FedWatch.
In other markets, equities were easier in Europe, while the dollar was little changed against the euro at around 1.1345. Subsequent economic releases in Europe and the US are light, although this afternoon the NAHB housing index is due.
In others, silver was quoted at $15.87/15.92 per ounce, down 17 cents, and close to a one-week low.
In the PGMs, platinum, which hit a six-week high of $1,125 per ounce on Friday, was steady at $1,010/1,015. Palladium was $10 lower at $687/692.
