The gold price rose in early US trade on Thursday amid a weakening dollar and evidence that Chinese growth is slowing to the point of state intervention.
Gold for June delivery was last up $5.10 at $1,206 per ounce on the Comex division of the New York Mercantile Exchange. Trade has ranged narrowly so far from $1,204.3 to $1,208.5.
“Gold seems to be in a consolidation mode around the $1,200 pivot point, with initial resistance at the 100-day moving average and around $1,212 and the April 7 high of $1,225,” MKS Finance said in daily note.
On Wednesday, quarterly Chinese GDP growth was on target at seven percent but 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 below last month’s 6.8 percent.
Today, foreign direct investment at 10.6 percent was significantly lower than last month’s 16.4 percent.
Analysts and economics are speculating that slowing Chinese growth could prompt the government to inject additional stimulus.
“Beijing is expected to deploy further monetary easing and other growth supporting measures in the coming weeks,” HSBC analyst James Steel said.
“Despite the slowing of growth in the Chinese economy, it is still growing nonetheless, which supports our view of expectations for growing bullion demand in that country on the back of rising income, particularly in the middle to upper middle class,” he added.
In the US, unemployment claims rose by 12,000 a seasonally adjusted 294,000 in the week ended April 11, which was modestly worse than the 284,000 forecast.
Labour reports have taken on added significance because the Federal Reserve is on the verge of raising interest rates. The current market consensus is that rates will rise in mid-2015 although this is a moving target that will be dictated by jobs and inflation data.
US building permits and housing starts at 1.04 million and 930,000 were both short of forecast but both remained around the one-million mark.
In other data today, the Italian trade balance at 3.54 billion euros was better than expected.
In wider markets, the dollar was 0.47 percent weaker at 1.07335 against the euro, while Germany’s DAX and France’s CAC-40 were down 1.72 percent and 0.64 percent respectively.
As for the other precious metals, Comex silver for May delivery was up 15 cents at $16.435 per ounce. Trade has ranged from $16.29 to $16.475.
Platinum for June delivery on the Nymex was down $2.60 at $1,151.10 per ounce, while the most actively traded palladium contract was at $772.6, up $5.50.
Light sweet crude (WTI) futures were down $1.15 or 2.06 percent at $55.21 per barrel in the most active contract.
(Editing by Mark Shaw)
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