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MTECHTIPS:-Gold plunges to Sept. low amid stronger dollar, China stimulus measures

MTECHTIPS:-Gold plunges to Sept. low amid stronger dollar, China stimulus measures

Gold futures fell sharply on Wednesday suffering its largest one-day fall in more than six weeks, amid a broadly stronger dollar and the introduction of further stimulus measures by China to rekindle its flagging economy. On the Comex division of the New York Mercantile Exchange, gold for December delivery wavered between $1,101.20 and $1,124.70 before closing near session-lows at $1,101.50, down 19.50 or 1.74% on the session. The precious metal dropped to its lowest level since August 11 when it fell below $1,100 an ounce. Gold likely gained support at $1,094 the low from Aug. 11 and was met with resistance at 1,132.90, the high from Sept. 3. In Beijing, China’s finance ministry said it would introduce “more forceful” fiscal measures in order to boost slowing economic growth, which is projected to remain at the lowest level in more than a decade for the third quarter. The measures include a potential tax cut for small business, as well as the allocation of funding for infrastructure projects. As part of the proposal, the ministry approved two railway projects worth nearly 70 billion yuan or $11 billion. “We will accelerate the implementation and improvement of proactive fiscal policy and related measures, do timely fine tuning, and speed up reform measures to support stable growth and promote continued healthy economic development,” the finance ministry said in a statement. It came one day after China announced that its dollar-denominated exports fell sharply by 5.5% on a year-over-year basis in August, exacerbating concerns about persisting weakness in the world’s second-largest economy. Imports, meanwhile, tumbled 13.8% on a yearly basis, producing a trade surplus of $60.24 billion. On Wednesday, the Shanghai Composite index closed 2.3% higher extending gains from one session earlier. China is the world’s largest producer of gold and the second-largest consumer behind India.
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