Gold remained choppy overnight in a range of $1331.15 - $1339.20, trading against movements in the US dollar.

It sank to its low of $1331.15 (supported by 50, 40, and 20 day MA’s) as the DX reached 89.97 on soothing comments from Chinese President XI that he would open the country’s economy, lower import tariffs on automobiles, and promised to enforce the legal intellectual property of foreign firms.

Global equity markets cheered the news, with the NIKKEI up 0.5%, the SCI +1.7%, Eurozone shares up from 0.6% to 1.1%, and S&P futures +1.1%.

Gold was able to bounce back to $1336 during European time on a combination of bargain hunting bids and comments from the Fed’s Kaplan (trade issue with China won’t resolve soon, reiterated his dovish base case of just 2 more rate hikes this year).

Later on, the DX collapsed through support at yesterday’s 89.81 low to reach 89.54 (2- week low) as the euro surged ($1.2325 - $1.2378) from hawkish comments from the ECB’s Nowotny (ECB could lift deposit rate to -0.2% from -0.4% to start rate normalization process, favors ending bond buying this year).

A miss on the US NFIB Small Business Index report (104.7 vs. exp. 107) also weighed on the greenback.

Gold ran higher, and broke through yesterday’s $1338 high to reach $1339.20 ahead of the NY open.

At 8:30 AM, a stronger than expected reading on US PPI (0.3% vs. exp. 0.1%) lifted the US 10-year bond yield from 2.79% to 2.812%.

The DX bounced to 89.84, and knocked gold back to $1336. However, the dollar’s strength proved short-lived as US stocks pared some gains on their open (S&P +25 to 2638), and the 10-year yield slid to 2.783%.

The DX dipped...

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