Global macro overview for 15/02/2016:
More bad news came from China overnight where trade balance shrank significantly and exceeded economists' estimates in January. Exports dropped 11.2% to $177.5 billion vs 1.4% in December, while imports plummeted 18.8% to $114.2 billion vs 7.6% in December. Thus, the trade surplus has widened to $63.3 billion. The recent data has increased worries about China. The growth pace of the world's second biggest economy is slowing significantly. Importantly, Chinese economy grew at the slowest pace in 25 years last year, causing capital to flood out of China to the "safe heaven" markets (gold, US dollar, Swiss franc, Japanese yen).
Is the China slowdown the reason for gold to rally so fast in the recent month? Perhaps, market participants consider the gold market to be the safe heaven and this is why it is rising so fast. On the daily time frame technical chart of gold the V-shape formation can be clearly seen after the double bottom at $1046 has been established. After making the local top at $1263, the market is now trying to test the technical support at $1191. The down trend might have been terminated, but to confirm that, the bulls must break above the level of $1307 and head towards the level of $1345.