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PRECIOUS-Gold near 4-month low as China GDP fuels risk sentiment
* China Q1 GDP at 6.4 pct vs analyst expectations of 6.3 pct
* Gold has fallen by about 5 pct from Feb high
* SPDR Gold holdings fall to near six-month lows (Updates prices)
By Arijit Bose
April 17 Gold prices edged higher on Wednesday as the dollar weakened, but the metal stayed near a four-month trough as better-than-expected economic readings from China lifted Asian shares and sharpened risk appetiteSpot gold was up 0.2 percent at $1,278.50 per ounce as of 0744 GMT, after having fallen as much as 1.2 percent to $1,272.70, its lowest since Dec. 27, in the previous session.U.S. GCcv1 were up 0.3 percent to $1,281.20 an ounce.The fell 0.2 percent after data showed that China’s pace of economic growth in the first quarter remained steady at 6.4 percent, beating expectations for a 6.3 percent expansion. USD/
The data, which signalled that Beijing’s recent stimulus drive might be paying off, also swung Asian shares higher. MKTS/GLOB”With the (Chinese) data that we’ve got, it certainly adds a bit of a downside to gold from here,” said IG Markets analyst Kyle Rodda.”The fact that we have broken below the key $1,280 level might make it difficult for prices to recover.”The metal has fallen by about 5 percent since its February high of $1,346.73 an ounce and is trading below its 50 and 100-day moving averages, which, analysts say indicates further weakness.”Signs of progress in U.S.-China trade negotiations and strong U.S. economic data have further bolstered risk appetites since the start of the second quarter,” Phillip Futures analyst Benjamin Lu said in a note.”The precious metal looks poised to undergo a bearish correction amidst growing downside risks in the near term,” the note added.
Gold, a non-yielding asset for investors looking to hedge against times of economic and political uncertainty, loses appeal when interest-yielding equities rise.A gauge of investors’ interest in the metal, holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, fell to a near six-month low of 752.27 tonnes on Tuesday. GOL/ETFElsewhere, silver gained 0.7 percent to $15.08 an ounce.Spot platinum rose 1.3 percent, to $887.50 per ounce, while palladium also climbed 1 percent to $1,363.45.The recent weakness in palladium prices was instigated by a conjunction of profit-taking and poor car sales data in China and the U.S., Metals Focus said in a note on Tuesday.However, analysts at Standard Chartered (LON:) expect supply deficit which had earlier pushed the metal to a record high of $1,620.53 last month, to deepen through this year and in 2020.