China's GDP growth rate decreased from the previous quarter, underpinning the recently observed global economic turmoil. As uncertainty continues to increase steadily, investors are likely to flee to lower-risk securities. Consequently, the demand for gold is likely to surge accordingly.
The National Bureau of Statistics of China (NBSC) just published the GDP growth numbers for Q3. According to the findings of the survey, China's economy expanded by 4.9 per cent in the three months leading to September, missing the market forecasts.
The slower than expected rate of growth underpins the global economic tribulations that have stifled economic activity in the third quarter, such as the persisting supply bottlenecks. The latter have stymied factory activity in the world's biggest economy and caused prices to increase elsewhere.
Meanwhile, the yuan continues to gain ground against the shaken dollar, as shown on the daily chart above. The USDCNY has been range-trading since the 16th of July, as elucidated by the ADX indicator, with a slight prevalence of bearish bias.
The latter can be deduced by the current reading of the Stochastic RSI indicator, which has been threading in the oversold extreme for some time now. But even more importantly, the strong selling pressure is demonstrated by the recent breakdown of the price action below the 38.2 per cent Fibonacci retracement level at 6.4418.
However, notice that shortly after the market had begun to range-trade, the price action started developing a Descending Wedge, which is a type of pattern that typically entails a likely bullish rebound.
It looks like the current downswing could bottom out at the next psychologically significant support level - possibly the 23.6 per cent Fibonacci at 6.4094 - before the bulls regain control. The first test for the eventual new upswing would be the descending trend line (in red).
According to the findings of NBSC's survey, China's economy expanded by 4.9 per cent in Q3, marginally below the initial market forecasts of a 5.0 per cent GDP growth rate.
This underpins a sizable decrease in the rate of expansion from the previous quarter when China's economy was shown to have grown by 7.9 per cent.