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Gold is trading at $1280, down 0.9% on the day as gold imports into China dropped by over 18% in April compared with March. China is the largest importer of gold in the world and traders were spooked by the sudden fall in imports.
The Chinese economy is slowing down and there are growing concerns about the credit market in China. These reasons have contributed to the decline in gold imports and have seen traders taking their money out of gold and investing in equities.
Despite the trouble in Ukraine, eurozone stocks are higher today as is it looks increasing likely that the European Central Bank will introduce a stimulus package next month. Speaking in Portugal yesterday, Mario Draghi warned that low levels of lending are a threat to the region’s recovery.
Mr Draghi is due to make an announcement today at 2.30pm (London time). If he alludes to monetary easing next month gold may remain below the 200-day moving average of $1286.