Gold price gains after US data disappoints, dollar weakens

Otmane El Rhazi from The Bullion Desk.

Gold moved off earlier lows late on Tuesday afternoon but continued to consolidate below $1,200, following the release of forecast-missing US data including retail sales.

The spot gold price was last at $1,197/1,198 per ounce, down $1.50 on Monday’s close. Trade has ranged from $1,184.0 to $1,201.7.

In this afternoon’s busy run of US data, the core PPI for March at 0.2 percent was in line with forecast and up from the previous reading of 0.5 percent.

But the PPI at 0.2 percent, retail sales at 0.9 percent and core retail sales at 0.4 percent all undershot, although all were in positive territory after soft readings last month.

In other data today, the US NFIB small business index at 95.2 came below the forecast 98.4. Business inventories also disappointed at 0.3 percent – a reading of 0.2 percent had been expected.

“A softening in the dollar has eased downside pressure on metal prices, triggering upside breaks, especially in the precious metals,” FastMarkets analyst Tom Moore said.

“This suggests that the dollar has once again got ahead of itself following the recent bearish indications from several key US sectors, which indicated that a later rate increase by the FOMC is most likely,” Moore said.

The Federal Reserve is debating when will be the right time to raise rates. The current market consensus is that the first increase will happen in the second half of this year.

The dollar was last at around 1.0686 against the euro, down almost a cent. Earlier today it traded at around 1.0545, not far off the recent 1.0457, which was the highest since January 2003.

In earlier data, China’s new loans for March at 1.18 trillion yuan were better than the forecast 1.05 trillion yuan. But the country’s M2 money supply disappointed at 11.6 percent – a reading of 12.3 percent was expected.

China releases its quarterly GDP on Wednesday as well as industrial production data, fixed asset investment and retail sales figures. GDP could come in under par after soft trade data earlier this .week

Elsewhere, the German WPI at 1.0 percent came in better than the forecast as did eurozone industrial production at 1.1 percent.

In the other metals, silver was last at $16.30/16.36 per ounce, up six cents. Platinum at $1,155/1,160 was $6 higher but palladium at $762/767 was down $4.

(Editing by Mark Shaw)

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