New York 09/08/2012 - Gold futures held steady toward the upper end of the recent range Thursday after a relatively low Chinese inflation reading and slightly worse-than-expected industrial production data had traders talking up the possibility of monetary stimulus in the near term.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last down 50 cents at $1,615.50 an ounce. For the past week, the yellow metal has been locked in a $1,600-$1,620 range.
In data, Chinese CPI beat the expected 1.7 percent to come in at 1.8 percent, but this does represent the lowest level of inflation since January 2010 and was down on the previous reading of 2.2 percent. PPI was at -2.9 percent against a forecast of -2.5 percent and a previous -2.1 percent.
Meanwhile, actual industrial production at 9.2 percent was down on the expected 9.8 percent, retail sales were lower at 13.1 percent and fixed asset investment dropped to 20.4 percent against an expected 20.5 percent.
“It's a little surprising that gold was able to discount declining ECB easing hopes overnight, but seeing an increase in Chinese easing talk might have cushioned gold market sentiment against the European easing shift,” the CME Group said in a market commentary.
“Apparently soft Chinese data and a moderation of Chinese inflation figures resulted in Asian investors spinning the overnight news into a supportive condition for the gold market,” CME added.
In the wider-markets, the euro was last about two-thirds of a cent weaker at 1.2305 against the dollar, while Germany's DAX and France's CAC-40 were down 0.60 percent and 0.15 percent respectively. US equity market are headed for a flat open.
As for the more industrial commodities, light sweet crude (WTI) oil futures for September delivery on the Nymex were up 47 cents at $93.82 per barrel and the most actively traded Comex copper contract was at $3.4160 per pound, down 0.55 cents.
“There is much to suggest that the upswing in gold prices may continue in the next few days, for the 25 percent rise in the oil price since the end of June also increases the risks of inflation, which is likely to halt the trend towards climbing real interest rates and strengthen demand for gold as a means of protection against inflation,” Commerzbank AG said in an note.
Meanwhile, Comex silver for September delivery was last down nine cents at $27.985 an ounce. Trade has ranged from $27.835 to $28.185.
“While September silver was unable to forge a definitive upside breakout overnight, it would seem like silver prices favoured the upper quarter of the previous day's range in the early Thursday US trade action,” CME said.
“On the other hand, September silver prices seemed to under perform relative to gold and platinum prices in the early Thursday US action and that might leave some bears with a small amount of technical confidence,” it added.
Platinum futures for October delivery on the Nymex were last up $1.90 at $1,412.10 an ounce, while the September palladium contract was at $585.75 an ounce, down 75 cents.
“Overall the metals still remain within recent price ranges, with participants seemingly happy to reinforce that behaviour while macroeconomic uncertainty continues to dominate the wider global markets. Activity remains rather light, while the range-trading nature of the metals is seeing volatility continue to fall more generally,” Standard Bank said in a note.
In US data, claims for weekly unemployment fell by 6,000 last week to a seasonally adjusted 361,000, beating expectations of 371,000. Additionally, the US trade deficit narrowed by 10.7 percent to $42.9 billion, the lowest level since December 2010.
(Editing by Martin Hayes)