Gold: Mildly bid after dismal China trade data

Gold is currently trading at $1,510, representing 0.20% gains on the day, dropped for two consecutive weeks for the first time since November 2018.

The metal picked up a bid at lows near $1,503 earlier today, possibly in response to the weaker-than-expected China trade data released on Sept. 8.

The country's dollar-denominated fell by 1%, while its imports contracted 5.6% year-over-year last month.  

China’s August trade surplus shrunk to $34.84 billion from $45.06 billion in July. Note that imports have decreased year-on-year, every month this year, except April, a sign of weak domestic demand.

The prolonged trade spat with the US is clearly hurting the world's second-largest economy.

PBOC cuts RRR

The People's Bank of China on Friday announced a broad-based 50 basis point cut in the reserve requirement ratio (RRR). The move set to take effect on Sept. 16 is set to unleash liquidity to the tune of CNY 800.

In addition, the central bank announced an extra 100 basis point cut in the RRR for city commercial banks operating solely within their respective provinces, of which 50 basis points will take effect on 15 October and 50 basis points on 15 November.

Further, the news crossed the wires earlier today that China could further rate cuts this year. The talk of aggressive easing by China may have added to the bid tone around the yellow metal.

Technically speaking, the metal is looking south, having confirmed a bearish reversal with a bearish engulfing last week.

That said, a drop to the support at $1,492 could be preceded by a minor bounce to $1,514, as an hourly chart indicator is reporting a bullish divergence.

Technical levels