Gold closes with weekly losses on China’s slowdown-linked fears

Gold price registered losses for the third straight week, with concerns over China’s economic stability continuing to weigh on the precious metal’s price. Gold failed to build on last Friday’s gains and started the week on a bearish note. Gold is trading at $1912.90 per ounce at the time of writing.

Disappointing data releases from China in the first half of the week dragged gold price to its lowest level in almost a month, and the pair struggled to regain traction despite softer-than-expected inflation data from the US.

Prior to the release of the Federal Reserve’s minutes from its July policy meeting, investors will keenly follow data on US and Chinese retail sales. The hawkish remarks made by Michelle Bowman led to a rise in US Treasury bond yields and a decline in the price of gold. She acknowledged the tight labour markets and emphasized the necessity for further rate increases to reduce inflation.

Following the sharp decline seen on Friday after mixed labour market data, the 10-year US T-bond yield rose more than 1% on Monday and recovered back above 4%. This week’s data from China showed that the country’s trade surplus widened to $80.6 billion in July from $70.6 billion in June.

Exports and imports decreased by 14.5% and 12.4% annually, respectively, as the US economy slowed down. This raised worries about a slowdown in China’s economy, which is the biggest buyer of gold worldwide.

For the second day running, the price of gold ended in the red. Patrick Harker of the Philadelphia Fed stated that policymakers would start lowering the policy rate next year, possibly keeping the rate constant. As a result, US yields decreased, which helped the price of gold contain losses.

In July, China’s Consumer Price Index fell by 0.3% annually, underscoring weak consumer activity. For the first time in nearly a month, the price of gold continued to decline and fell below $1,920. A bill to limit investments in specific Chinese firms was signed by US President Joe Biden, who urged the

Fed’s Mary Daly said she would need a “path of inflation completely downward” to support holding rates steady. The 10-year T-bond yield stabilized above 4%, but Gold price could not extend its rebound.

The US Department of Labour’s weekly Initial Jobless Claims data could trigger a short-lasting reaction in Gold Price. With 40 more days until the next Fed meeting, market players will scrutinize policymakers’ comments to confirm or deny chances of another rate increase this year.