Copper dips as China Q1 data disappoints on retail, industrial output

Investing.com - Copper fell in Asia on Wednesday and gold dipped after data from China showed lower than expected gains in industrial production, retail sales and fixed-asset investment for the first quarter, though GDP came in on target.

On the Comex division of the New York Mercantile Exchange, gold prices for June delivery held around $1,191.40 an ounce, down 0.10%.

Elsewhere, Silver for May delivery traded around $16.120 a troy ounce, down 0.25%, while copper for May delivery dipped 0.28% to $2.698 a pound.

China's first quarter GDP rose 7.0% year-on-year, matching expectations, while industrial output gained 5.6%, below the 6.9% seen and retail sales increased 10.2%, lower than 10.9% expected and fixed assets investment gained 13.5%, less than the 13.8% seen.

Overnight, gold futures fell slightly on Tuesday as metal investors locked in profits, in spite of a weaker dollar pushed down by mixed U.S. economic data.

A host of economic data released on Tuesday morning prompted a polarizing response from economists. U.S. retail sales for March rose 0.9% for the month, marking its first monthly in more than three months. Strong gains in automobile, furniture and department store sales, led to the highest monthly increase since last March.

The data may not be considered bullish, however, since some economists forecast a weather-related bounce of more than 1%, following a harsher than usual winter. A reading over 1% might have assuaged the concerns of those who were bearish on the economy following a weaker than expected U.S. jobs report in March.

At the same time, the U.S. Department of Labor's Producer Price Index rose 0.2% last month following a 0.5% decline in February. The increase is a strong harbinger for continued growth in the Consumer Price Index, the Labor Department's main indicator on inflation. The Fed is looking for inflation to move to its targeted goal of 2% before it decides on the timing of an interest rate hike. The index rebounded 0.2% in February, after declining sharply by 0.7% a month earlier.

Continued bearish economic data could fuel expectations for a delay in raising rates. Gold, which is not attached to interest rates or dividends, struggles to compete with high yield bearing assets.

Gold can move inversely with the dollar since dollar-denominated commodities become more expensive for foreign purchasers when the dollar is stronger.

Meanwhile, prices on the Shanghai Gold Exchange remained in focus after disappointing Chinese trade data on Monday. Last month, exports in China declined by 15% on a year-over-year basis, one month after rising by nearly 50%. Chinese imports for March also fell by 12.7%, after declining by 20.5% in February. On Tuesday, gold (Au50g) on the Shanghai Exchange remained virtually unchanged at 114.88 (0.05).

China is the world's largest producer and second-largest purchaser of the precious metal.

Also on Monday, Frederic Panizzutti, CEO of MKS Precious Metals told a conference in Dubai that Chinese consumption grow to "more than 2,000 tons per year," by 2018. Last year, China consumed approximately 813 tons of gold.