Markets are reacting to the latest data out of China Monday in a holiday-shortened session. The latest data will only add to investor anxiety over the health of the world’s second-largest economy.
Chinese GDP
The latest reading of Chinese GDP showed growth of 6.6% for 2018. That figure represents the slowest annual pace since 1990. The slowdown took a turn for the worse in Q4 of last year as the growth rate slipped to 6.4% on an annual basis. The ongoing U.S./China trade war clearly had an effect on the nation’s economy as exporters were forced to lay off employees. The jobless rate reportedly ticked higher last month to 4.9% from a reading of 4.8% a month earlier.
Weakness in China has been a major source of angst for investors. Some weakness has also been seen in key areas of the U.S. economy, especially in manufacturing, and any further signs of slowing in the globe’s two largest economies could potentially have a negative impact on stocks and risk assets. Due to China’s role as a major commodity consumer, any further slowing may also impact the price of raw commodities.
Some analysts have suggested that the Chinese economy is in fact even weaker than the data suggests. The weaker GDP rate could have an impact on markets this week, with traders returning Tuesday from the Martin Luther King Holiday. Investors will also likely watch Chinese policy-makers closely as the data could pave the way for further stimulus measures.
Market Reaction
Spot gold was last down $1.51 per-ounce at $1279.79. The market is seeing a little bit of selling today and could potentially see additional pressure tomorrow as trading volumes return.
After making an attempt at breaching key upside resistance, the market has taken a step back. Although recent weeks have seen buying on any dips, the market is becoming increasingly vulnerable to a larger sell-off. A stronger dollar and worries over Chinese commodity demand could weigh on the metal in the sessions ahead.
Gold Price Chart
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