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Gold trades sideways as investors digest weak Chinese data

Published 03/11/2013, 02:02 PM
Updated 03/11/2013, 02:03 PM
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Investing.com - Gold traded sideways on Monday after Chinese industrial output figures missed expectations, while U.S. jobs data released on Friday blew past market calls, which sent investors jumping to the sidelines to digest the data.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.11% at USD1,578.60 a troy ounce in U.S. trading on Monday, up from a session low of USD1,574.60 and down from a high of USD1,582.30 a troy ounce.

Gold futures were likely to test support USD1,560.60 a troy ounce, Friday's low, and resistance at USD1,1584.80, Thursday's high.

China's industrial production rose 9.9% in February, below expectations for a 10.5% increase also below a 10.3% hike logged during the previous month.

The news fueled fears that the global economy still faces headwinds, while a firming Chinese consumer price index stoked concerns that Beijing will hold off on stimulus measures, which would make gold an attractive hedge.

Consumer prices in China rose by 3.2% in February from a year earlier, above expectations for a 3% increase and accelerating sharply from a 2% rate of increase in January.

Meanwhile in the U.S., gold continued to erases losses sustained when the Bureau of Labor Statistics reported Friday that U.S. economy added a net 236,000 nonfarm payrolls in February, way more than an expected 160,000 increase and up above 119,000 reported in January.

The U.S. private sector added 246,000 jobs, beating expectations for a 167,000 increase, following January's 140,000 rise.

The headline unemployment rate fell to 7.7% in February from 7.9% in January, beating analysts' calls for the rate to remain unchanged.

The numbers sparked heavy demand for dollars on sentiment the Federal Reserve will soon consider winding down stimulus programs designed to spur recovery by flooding the economy with liquidity in a way that encourages investing and hiring.

Gold and the dollar tend to trade inversely from one another.

Uncertainty over the health of the Chinese economy coupled with solid U.S. jobs data kept gold moving sideways as investors digested the news.

Elsewhere, the Fitch Ratings agency slapped a one-notch downgrade on Italy amid concerns that political uncertainty and recession may delay recovery, which added to the precious metal's volatility.

Elsewhere on the Comex, silver for May delivery was down 0.30% and trading at USD28.862 a troy ounce, while copper for May delivery was up 0.24% and trading at USD3.517 a pound.






 

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