Prices of gold and SPDR Gold Trust (ETF) (NYSEARCA:GLD) were seen sliding in early trading in European, rattled by the decision by the European Central Bank to keep interest rates unchanged. The move sparked a selloff in the bonds market, causing a spike in yield and hurting appetite for gold in that process.

However, the decline in gold prices is likely to be limited as a relatively weaker U.S. dollar and downbeat Chinese economic data provide some support. The 0.30% retreat of the USDJPY saw gold prices up 0.05% at close of trading in Asia.

Downbeat Chinese consumer data

China reported that its consumer price index only rose 0.1% month-over-month and 1.3% year-over-year in August. But economists were looking for consumer prices to increase 0.3% on a monthly basis and 1.7% on a yearly basis. China’s downbeat economic data was another reason gold edged up in Asia.

In Europe, gold was last seen trending down 0.15% after earlier hitting a session trough of $1,338.75 a troy ounce.

Overnight, gold slipped 0.6% to $1,341.60 in North America, reversing cause from recent gains following mixed U.S. economic data. The U.S. economy only added 151,000 new jobs instead of 180,000 new jobs that economists expected for the month of August. The downbeat employment data hurt expectations of a near-term interest rate hike by the Federal Reserve, thus weakening the dollar and turning traders to safe-haven assets such as gold.

Steady rates in Europe

By staying the current level of interest rates, the ECB signaled somewhat upbeat economic sentiment, but that doesn’t favor gold trading.

“[ECB President Mario Draghi] kept his weapon in the holster today […] the higher interest rates created a little bit of a correction in gold,” noted Tai Wong of BMO Capital Markets in regards with unchanged rates in the EU.

The currency market

In the forex market, EURUSD was up 0.14%, while GBPUSD was seen rising 0.10%. AUDUSD was down 0.18% and NZDUSD was down 0.15%.