Gold Prices Hold Gains in Asia

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On Friday, gold prices stayed positive in Asia after stronger than anticipated increase in China consumer and producer price data.

Delivery of gold for December on the Comex division of the NYMEX increase 0.08% to $1,258.55 a troy ounce.

Also on the Comex, delivery of silver futures for December increased 0.07% to $17.473 a troy ounce and copper futures inched up 0.05% to $2.124 a pound.

China reported CPI for September with an increase of 0.7% MoM, well above the 0.3% pace seen and led by food prices, and a 1.9% increase YoY, quicker than the 1.6% increase anticipated. As well PPI data increase 0.1% YoY, in comparison to  a decline of 0.3% expected for the first positive development since February 2012.

“The domestic industrial supply and demand situation is trending better, with improving signs in inventories and sales by key industries,” due to government policies to stabilize growth, reduce excess capacities and inventories, Yu Qiumei, the bureau’s senior statistician wrote, said in a statement.

“Improving international commodity prices also supported the price gains in domestic, industrial products,” Yu stated.

Earlier in Japan, the PPI for September decline 3.2% as expected YoY and came in flat, compared to a 0.1% MoM increase seen.

Suddenly, on Thursday,  gold prices held on to sudden increase during North America’s session, as the U.S. greenback and global stock markets pulled back after unexpectedly weak Chinese trade data raised fresh concern about the world’s 2nd biggest economy.

China’s September exports dipped,while imports surprisingly shrank after picking up in August, suggesting indication of steadying in the world’s second-largest economy may be temporary .

Exports plunged 10.0% from a year before, far worse than predictions for a decline of 3.0%, while imports dropped 1.9%, compared to anticipation for a gain of 1.0 percent. That left China with a trade surplus of $41.99 billion for the month, the lowest in six months, the General Administration of Customs stated on Thursday.

The downbeat figures generated a decline in global equities and a fall in the U.S. dollar and gave a boost to safe haven assets, such as gold and the yen.

The world’s biggest copper consumer is China, accounting for approximately 45% of world consumption.

Temporarily, minutes of the Federal Reserve’s September policy meeting, issued on Wednesday presented several voting members of the policy committee judged a rate hike would be warranted “relatively soon” if the U.S. economy continued to reinforce.

Currently, Markets are pricing in approximately a 69.8% possibility of a rate hike at December’s meeting, according to sources.

Gold is sensitive to adjust in U.S. rates, which boost the opportunity cost of holding non-yielding assets like bullion.

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