The rally in Bullion market was brought to a slow grinding halt last Friday, as the Dollar rebounded from its weekly decline. Previously, Bullion had hit record highs underpinned by the Dollar‘s slide. This was due to Bernanke’s dovish comments that Fed may have to continue its current monetary stimulus for the meantime. But later, the weak economic signals from ECB and the expectations of poor Chinese GDP ata put Dollar on a rebound, dragging down gold prices.

On Friday, the spot gold prices had dropped by 0.4% to $$1,280 an ounce. While the US gold futures, a key gauge of bullion prices, declined by $2.30 for the August delivery to $1,277.60 an ounce. This was a clear sign that gold was on track to snap its four day weekly gains.

In line with this trend, other precious metals like silver too posted losses on last Friday. Spot silver was down by 1.4% to trade at $20 an ounce from its previous high of $20.26. While, platinum fell by 0.13% to trade at $ 1,401.05, after reaching a three-week high of $1,414.75, palladium dropped by 21% to trade at $717.50. 

The reasons behind bullion’s slide from its rally were the same factors that had helped the Dollar hit a rebound. The ECB’s Vice President Vitor Constancio had commented on Friday that the current slow growth in Euro zone is expected to continue for some time, requiring no changes in the present accommodative monetary policy. This was supported by the political strife that was worsening the economic crisis in Portugal and the downgrading of French economy by Fitch.

Apart from this, the Chinese Finance Minister comments speculated that the Chinese GDP growth may quash expectations with only a 7% growth. This created demand concerns in China, one of world’s largest Gold consumers. Also, the US Producer Price Index (PPI) for June bet expectations, as it grew by 0.8% against an expected 0.5%. These factors sent Dollar on a rebound that dragged down the bullion prices from its weekly rally.

Meanwhile, on Monday there seemed to be some reprieve for gold, as it pared backs some of its weekend losses. The US Gold Futures for the August delivery appreciated slightly by $5.90 to trade at $1,283.50 an ounce on Monday, July 15. This was apparently due to disappointing US retail sales data that had halted the Dollar’s rebound.

On the other hand, the Chinese GDP data was not as disappointing as speculated. The Chinese GDP grew by 7.5% in line with the previous market expectations, dispelling slow down worries for the World’s second largest gold consumer. Supporting this view, the retail spending in China had increased by 13.3% year-on-year, clearly faster than the analysts’ expectations.

However, the gold prices again dipped on Tuesday, with the Spot Gold dropping by 0.2% to $1,279.25 an ounce, by 0321 GMT and the US Gold Futures falling by $5 to trade at $1,278.10.  

This is was mainly due the Stock market in US and other major countries like Japan rallying to post significant gains since last week. Consequently, this makes Bullion unattractive, as investors flock to Equities market, bringing down the gold prices.

On the whole, Bullion’s four day rally was halted last weekend by Dollar’s rebound supported by weak global economic signals and positive US PPI data. However, Gold has started to pare back its losses with more disappointments from US data slowing the Dollar rebound. Thus, Bullion continues to edge up slowly with brief stretches of decline.

Note: This blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.