Gold price edges higher, US data disappoints

Otmane El Rhazi from The Bullion Desk.

Gold edged off earlier lows late on Wednesday afternoon following the release of forecast-missing US data.

The spot gold price was last at $1,195/1,196 per ounce, up $2.60 on Tuesday’s close – it struck its lowest in two weeks at $1,184.00 in yesterday’s session. Trade has ranged narrowly from $1,189 to $1,197.5.

Today’s US data was mostly disappointing – the Empire State manufacturing index came in at -1.2, the capacity utilisation rate at 78.4 percent and industrial production at -0.6 percent. NAHB housing market index was slightly better than expected at 56 and crude oil inventories rose by 1.3 million barrels.

But the dollar remains upbeat – it was last at 1.0590 against the euro.

“Currency moves remain in charge for the moment, though on the physical side we are seeing good physical demand on the latest price dip ahead of the Akshaya Tritiya festival in India next week,” ICBC Standard Bank analyst Leon Westgate said

In data out of China this morning, the country’s quarterly GDP growth figure was on target at seven percent although it was the lowest figure in six years.

Other economic indicators underperformed market expectations – year-on-year industrial production was at 5.6 percent, much lower than the projected 6.9 percent and also the lowest in six years.

In others, fixed asset investment was at 13.5 percent, lower than the forecast 13.8 percent, and retail sales at 10.2 percent were 0.7 percentage points lower than expected.

“We would not be surprised if gold gets additional support from this weaker-than-expected Chinese data through safe-haven demand for physical metal due to China’s historical affinity to the yellow metal as a store of wealth and Beijing’s drive to promote gold as a hedge to currency risk,” FastMarkets’ Tom Moore said.

Elsewhere, renewed suggestions of a possible ‘Grexit’ may well provide some support. Negotiations between Greece and its creditors resume today, though a deal does not seem imminent while Athens apparently refuses to proceed with further austerity measures.

“Greece and what happens next continues to dominate Europe, with euro-gold remaining well supported amid mounting uncertainty over the potential and indeed timing of a Grexit and all the capital controls and other measures that would need to be put in place,” Westgate said.

In European data, the German CPI was as expected at 0.5 percent as was the French CPI at 0.7 percent. The eurozone’s February trade balance at 22 billion euros was slightly better than the expected 21.2 billion euros.

In the other metals, silver was last at $16.21/16.26 per ounce, up $0.06 – it hit a near-four-week low in the previous session. Platinum was last at $1,149/1,154, mostly unchanged, and palladium at $761/767 was down $2.

“Platinum and palladium have both been very quiet, with very little volumes being seen even with NYMEX options expiry today. Both metals are range-trading,” Westgate said.

(Additional reporting by Ian Walker, editing by Mark Shaw)

The post Gold price edges higher, US data disappoints appeared first on The Bullion Desk.