Gold price steady, China adds more metal to reserves

Otmane El Rhazi from The Bullion Desk.

Gold was steady on Tuesday morning in London around $1,120 while investors remain on the sidelines ahead of the Federal Open Market Committee meeting next week.

The spot gold price was little changed at $1,120.50/1,120.90 per ounce, still around its lowest in two weeks. Trade has ranged narrowly from $1,118.70 to $1,122.20 so far.

“Since next week’s meeting could point the way forward (the Fed may raise interest rates again for the first time since mid-2006), gold is unlikely to do much else until then,” Commerzbank noted.

The odds of the US central bank lifting rates from near-zero levels this month is at 32 percent, ANZ Research said on Tuesday in a report.

“The market seems to be betting that concerns over the Chinese economy and the associated financial market volatility will be enough to stay the Fed’s hand, although there are sound domestic grounds for the Fed to start hiking,” it said.

The latest Chinese trade data further underlined the slowing pace of growth in the country – imports fell 14.3 percent in August in yuan-denominated terms while exports fell 6.1 percent.

“Although we feel the precious metals are oversold, especially the industrial precious metals, investor appetite remains weak,” FastMarkets head of research William Adams said.

“Gold is in the same boat but it may be thrown a life-line if investors start to get more concerned about the contagion from China and the impact that has on emerging market economies and currencies,” he added.

China increased its reserves of gold by 16 tonnes in August on top of the 19 tonnes added in July, the People’s Bank of China (PBoC) said.

This is the second monthly update since the PBoC said it would follow the IMF’s reporting system on state reserves although the news “went virtually unnoticed by the market”, Commerzbank noted.

In other economic data, the German trade balance was better than expected but the French number disappointed. The EU revised GDP for the second quarter was 0.4 percent against the previous 0.3 percent.

Data from the US this afternoon includes the NFIB small business index, the labour market conditions index and consumer credit.

In the other metals, silver was little changed again at $14.66/14.71 per ounce, while platinum climbed $12 to $996/1,001 and palladium at $586/591 was $7 higher.

According to the World Platinum Investment Council (WPIC), the platinum market was better supplied in the second quarter than in the first due to higher mining production in South Africa and increased recycling supply from the automotive and jewellery industries.

The WPIC expects a supply deficit of 445,000 ounces for the year as a whole – considerably higher than its May estimate, Commerzbank noted.

(Additional reporting by Vivian Teo, editing by Mark Shaw)

The post Gold price steady, China adds more metal to reserves appeared first on The Bullion Desk.