Gold (XAU-USD) Rises as Investors Weigh China’s Economic Data

The spot price of gold (XAU-USD) is slightly higher at the time of writing. Recent Chinese economic data, which showed signs of recovery, is improving market sentiment. Indeed, there was a notable uptick in Retail Sales and Industrial Production. This caused the U.S. Dollar Index (DXY) to slip in early trading, therefore boosting the price of gold. However, gold is off its earlier highs as the DXY has since recovered its losses.

As the market awaits the Federal Reserve’s interest rate decision later this week, investors expect rates to stay put at the current 5.25% to 5.5% range. Since gold tends to perform better when interest rates fall, the actual decision will likely have little impact on the price. Instead, a potential catalyst for the metal will be the Fed’s summary of economic projections, which will highlight the central bank’s expectations. If projections come in worse than expected, they might boost gold’s appeal as a safe-haven asset.

China’s Younger Demographic Shows Growing Interest in Gold

Meanwhile, China’s growing interest in gold, particularly among the younger demographic, highlights a shift towards tangible investments amid deflation and a volatile stock market. Gold beans, which are small pill-like pieces of gold that weigh about a gram, have emerged as a popular yet controversial investment.

Despite their higher price point compared to the spot value of gold, they highlight a blend of traditional and modern investment strategies as economic fluctuations plague China. This trend, amplified by social media discussions, demonstrates a persistent faith in gold’s value as a low-risk asset despite its authenticity risks.

Technical Analysis of Gold

Using TipRanks’ technical analysis tool for gold, the indicators seem to point to a positive outlook. Indeed, the summary section pictured below shows that 11 indicators are bullish, compared to five neutral and six bearish indicators.