Gold is trading at $1293, down 0.7% as the soft yuan has impacted the level of gold imports into China, which is a major import of the precious metal. The yuan has lost over 3% versus the US dollar year-to-date and since gold is listed in US dollars it has made the yellow metal relatively more expensive to buy for clients based in China. Some traders were speculating that the People’s Bank of China was behind the decline in the yuan; if the currency pulls back some of its losses, we could see gold head towards the important $1300 level.
Gold is currently below the 200-day moving average of $1294. This is a worrying sign although, as I mentioned previously, if violence were to escalate in Ukraine we could easily break through the $1300 mark. Equity markets have been strong lately as traders have been moving their cash from safer assets like gold to riskier assets like stocks. We could see a reversal of that if uncertainty in Ukraine increases.