The gold price was relatively flat during Asian trading hours on Friday as optimistic data releases from China boosted global market sentiment.
Spot gold was last at $1,227.70-1,228 per ounce on Friday, down just $0.10 after dipping to a week’s low of $1,223.80 on Thursday. Trading ranged at $1,225.20-1,229.80 so far.
After releasing improved March trade data on Wednesday, China announced on Friday its first quarter GDP growth at 6.7 percent, in line with expectations though slightly lower than October-December’s 6.8 percent growth.
China’s March industrial production rose 6.8 percent year-on-year in March, beating forecast of 5.9 percent.
The country’s fixed asset investment also increased 10.7 percent year-on-year in the first quarter, above the consensus of 10.5 percent. March retail sales saw 10.5 percent year-on-year growth, slightly higher than market forecast of 10.4 percent.
The first quarter GDP and March data are likely to show China rebalancing, therefore supporting risk, said ANZ Research on Friday morning before the releases.
“While the current boost in risk-on sentiment could exert further selling pressure in gold, we believe that risk aversion will resume sooner rather than later, lifting ETF demand and speculative buying interest on Comex. This could push gold to new 2016 highs in the next month or so,” said Boris Mikanikrezai, metals analyst at FastMarkets.
Support for gold lies at the New York low of around $1,224/25 and then around $1,215/17, with first resistance is at $1,230, said MKS Group on Friday morning.
In data released overnight, US CPI month-over-month in March gained 0.1 percent, below the 0.2 percent forecast. Core CPI – excluding energy and food prices – over the same period experienced a 0.1 percent uptick, which missed its 0.2 percent estimate and was the smallest increase since August.
Unemployment claims between April 1-8 came in at 253,000, besting the economic consensus of 270,000 and under the psychological 300,000 mark.
While the US labour market continued to show strength, the moderation in core CPI readings is likely to see the US Federal Reserve exercise caution in its rate hike plans.
“Despite the strengthening labour market in the US and real labour earnings growth, signs of a definitive firming trend in US inflation remain elusive,” said ANZ.
“If views on the inflation outlook firm and Treasure yields snap higher, brace for market fallout as asset values are reassessed. However, the elusive inflationary catalyst still looks hard to find in the near term,” the bank added.
Majority of market participants expect the next US rate hike only in December, according to the CME Group FedWatch.
Other data due from the US later on Friday includes the Empire State manufacturing index, capacity utilisation rate, industrial production, preliminary UoM consumer sentiment and preliminary UoM inflation expectations.
In currencies, the US dollar index was last at 94.96, up 0.05 percent from Thursday.
In other commodities, the Brent crude spot price was last at $43.86 per barrel, up 0.25 percent, and the Texas light sweet crude rose 0.44 percent to $41.55 so far on Friday.
The market is awaiting the outcome of an April 17 meeting among key oil producers to see if a production cut agreement could be reached, though analysts see such a probability as low.
In equities, the Shanghai Composite is so far up 0.23 percent to 3,089.40 on Friday.
In other precious metals, silver fell $0.005 to $16.12/16.14 recently. Platinum decreased $2 to $982/987 while palladium increased $2 to $558/564 so far on Friday.
On the Shanghai Futures Exchange, gold for June delivery was unchanged at 256.60 yuan per gram and June silver was flat at 3,480 yuan per kilogram.
(Additional reporting by Dalton Barker)
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Source: Bullion Desk News
