Haven Demand Tumbles Plunging Gold Prices

Gold recorded its biggest weekly percentage dip last week since the five days ending March 10th, hit by the prospect of higher interest rates that could take the shine off the metal. Technical analysts reckon that support $1260 is the key level to watch as momentum downwards accelerates. If prices dip below, gold could slide all the way to $1230 per troy ounce. Given the current session’s weakness, and an improved outlook for US government funding which was reached overnight, pressure may stay intact near-term.

However, ignoring the near-term outlook for gold, hedge funds continue to buy gold futures, increasing their net long position in COMEX gold for the sixth consecutive week according to figures released by the US Commodity Futures Trading Commission on Friday. Gold was last seen trading just below $1262.50 per troy ounce on Monday after opening lower.

After reaching a multi-year high in March, the pace of Chinese manufacturing activity slowed in April to the lowest point in six months, indicating that the most recent spurt in growth is unlikely to be sustainable. The National Bureau of Statistics of China purchasing manager's index, which measures conditions at manufacturing units and mines, came in at 51.2 in April. While the figure managed to stay above the 50-mark that separates growth from contraction, it fell from the five year high of 51.8 hit a month prior.

The Chinese economy grew at a faster-than-expected 6.90% in the first quarter, buoyed by higher government infrastructure spending. However, growth is expected to slow as authorities take steps to cool the booming real estate sector. With the dollar gaining down and manufacturing data disappointing, USDCNH is back on the climb following a modestly lower close on Friday.