Gold, Copper Recover in Asia as China Data, Yellen Offer Support


On Friday, gold and copper recovered in Asia after China reported solid gross domestic product (GDP), retail sales and industrial production and the Fed chief indicated caution in statements about the development capacity of the economy.

Delivery of gold for February on the Comex division of the NYMEX increased 0.43% to $1,206.65 a troy ounce. Copper futures increased 0.27% to $2.618 a pound.

China’s gross domestic product (GDP) raised 6.8%  YoY in the 4th quarter, slightly beating expectations by analysts of 6.7% progress for the calendar year, however,  in line with estimates from the head of China’s state planning agency.

The figures possible indicated that China’s economic development is beginning  to become stable as it transitions from heavy manufacture to domestic-led consumption.

For the quarter-on-quarter gross domestic product  (GDP) figure, the increase of 1.7% as anticipated.  Industrial production increased 6.0%, a tick below the 6.1% increase perceived, while retail sales increased 10.9%, beating the 10.7% increase anticipated.

Previously, Fed Reserve Chair Janet Yellen stated that running a “hot” economy for an extended period would be a threat.

“I think that allowing the economy to run markedly and persistently “hot” would be risky and unwise,” Yellen said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research.

Although there are no indications yet, that the Fed  Reserve is behind the curve or the economy is at risk of a sudden surge in inflation, she said, “I consider it prudent to adjust the stance of monetary policy gradually over time.”

Suddenly, on Thursday, gold prices stayed under pressure during U.S. morning trade, holding on to earlier losses as investors expected additional statements from Fed Reserve Chair Janet Yellen for fresh indications regarding the timing of the next rate hike.

In statements sent to the Commonwealth Club in San Francisco on Wednesday, Yellen stated it would “makes sense” for the U.S. central bank to gradually lift interest rates with the U.S. economy close to full employment and inflation headed toward the Fed’s 2% goal.

The Fed Reserve chief stated that she and other Fed policymakers expected the central bank to boost its key benchmark short-term rate “a few times a year” through 2019. That step could change depending on how the viewpoint for the economy develops, Yellen cautioned.

The previous month, the Fed Reserve indicated  that at least three rate increases were in the offing for 2017, according to a prediction of interest rates from members of the central bank, known as the dot-plot.

However, traders stayed skeptical. As an alternative, markets are pricing in just two rate hikes throughout the course of this year, according to the reports.

Temporarily, global financial markets will continue to concentrate on U.S. President-elect Donald Trump as he takes the Oath of Office and offers his inaugural address on Friday. On Thursday,  Trump will be speaking at a pre-inauguration event in Washington DC at 11:15AM ET (16:15GMT).

Any information he may give on his promises of tax reform  will be welcome by investors, infrastructure expenditure and deregulation, in addition to insight regarding policies on China and the domestic economy.

Trump has been recognized with being a major catalyst behind the market’s remarkable rally since election day, although Trump has yet to plan his economic policies in detail.

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