Gold climbs above $1,200, dollar tapers off

Economies.com
2018-08-14 13:58PM UTC

Gold futures rose for the first time in four sessions off March 15, 2017 lows, as the dollar index steadied lower but still near year highs, following earlier data from China, the world's largest metals consumer, and the US. 

 

As of 01:47 GMT, gold futures due in December rose 0.42% to $1,203.90 an ounce, while the dollar index slipped 0.07% to 96.33 against an array of major currencies. 

 

Earlier data from China showed the unemployment rate rose to 5.1% in July from 4.%, while retail sales rose 8.8% y/y, slowing down from 9.0%, and missing estimates of 9.2%. 

 

Industrial production rose 6.0% y/y with no change, missing estimates of 6.3%. 

 

China is embroiled in a trade war with the US, which is harming its economy, especially export-focused businesses, and is expected to weigh on its growth rate.

 

Otherwise, earlier US data showed import prices unchanged in July, compared to a 0.1% m/m dip in June, and missing estimates of a 0.1% increase, while prices excluding petroleum slipped 0.1%, compared to a 0.4% decline in June. 

 

On a yearly basis, prices rose 4.8% last month, up from 4.7% in June, and beating estimates of 4.5%. 

 

World Gold Council  

 

The World Gold Council recently forecast an increase of demand on the yellow metal in the second half of 2018 as inflation rises and the global trade war takes firmer shape and hurts currencies. 

 

Despite similar concerns in the first half of the year, gold prices were stymied by dollar's strength as the Federal Reserve tightens monetary policy on the back of strong US data.  

 

Recently, the World Gold Council reported a 7% drop in global demand in the first quarter of 2018 to 973.5 tonnes, the lowest since the first quarter of 2008, as investments fell 27% on the precious metal to 287 tonnes from 383 tonnes in the first quarter of 2017. 

 

Central banks' gold demand rose 42% to 116.5 tonnes, especially from Russia, while jewelry demand steadied at 487.7 tonnes, as mine supplies grew 1% y/y to 770 thousand tonnes. 

 

Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, fell 1.48 tonnes on Monday to a total of 784.6 tonnes the lowest since February 2016, after gold prices registered losses in July for the fourth month in a row. 

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