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The precious metal had jumped 1.5% above the $1,300 level overnight, amid the escalating tensions between Russia and Ukraine, with Russian troops amassing near the eastern Ukrainian border.
The rising geopolitical risks have prompted investors to become more conservative, with defensive sectors such as telcos and healthcare offsetting some of the losses in the broader market.
The poor data from Australia today will weigh on sentiment. Its unemployment rate for July hit a 12-year high at 6.4% from 6% in the prior month.
There was further uncertainty with China’s recovery earlier this week, as HSBC’s services PMI for July was a disappointing 50.0 – the weakest read in nine years.
There will be a lack of optimism as we head towards the end of the week. We will get another round of Chinese macro data tomorrow, where market expectations for exports and imports are to be softer.
Amid an overhanging bearish outlook, there could be some strong support for gold in the interim. It has broken above both its 15-day moving average (DMA) and looks set to test its 30-DMA.