Gold Prices Achieve Solid Gains

The dollar is edging lower, as investors consolidate their bets before key U.S. inflation data later this week that may reverse the currency's weakness this year. Typically, a weaker greenback supports commodities such as gold, which are priced in U.S. dollar, lowering the cost for overseas buyers. Gold shed close to 1.00% on Friday after better than expected U.S. employment data increased the likelihood of a December rate hike from the Federal Reserve.

Any tightening in monetary policy decreases the relative demand for gold. Bullion prices were last seen around $1259.50 an ounce. $1250 represents the immediate downside support from where the metal rebounded yesterday. An hourly close above $1261 could see gold mount a climb back to levels of $1270 an ounce.

China’s trade growth weakened in July, official data from the General Administration of Customs showed early Tuesday. July exports rose 7.20%, while imports grew by 11.00%. Analysts polled by Reuters had forecast a 10.90% year-over-year gain in Chinese exports. July imports were projected to increase by 16.60%. Trade surplus contracted by 10.70% from a year ago to $46.7 billion. The country’s surplus with the United States rose 2.00% in July to $25.2 billion.

Economists reckon Chinese economy will likely cool this year, hurting demand for foreign goods, as state controls imposed to curb rising debt take root. The International Monetary Fund expects Chinese economic growth to slip to 6.60% this year from last year’s 6.70%. USDCNH is tumbling Tuesday morning to last trade around 6.70300.