Prices are testing below support at 1297.74, the 50% Fibonacci expansion. A daily close below that exposes the 61.8% level at 1291.48. Alternatively, a reversal above the 38.2% Fib at 1304.00 aims for the 23.6% expansion at 1311.75.
China's gold demand slumped 19.4 percent in the first six months of 2014 from year ago, the China Gold Association said in a statement on Thursday, but production rose strongly in the same period as miners ramped up output to protect profit margins.
Gold demand from China, the world's largest consumer, has slackened this year as a 28 percent tumble in 2013 prices, which was the first annual decline in 13 years, dented consumer confidence in the metal as an investment tool.
Lower demand this year is also partly due to huge purchases last year. The drop in prices prompted many to bring forward their purchases, eating into 2014 demand.
Gold demand from January to June stood at 569.45 tonnes, compared with 706.36 tonnes in the same period last year, the association said in a statement on its website. Total output in the first six months of 2014 reached 211.1 tonnes, up 9.47 percent from a year ago.
