China’s consumer price index rose 2.7% from a year earlier, the National Bureau of Statistics said on Tuesday, compared with a median estimate of 2.5% in a Bloomberg survey. Bullion rose 1.1% yesterday as the dollar retreated from a three-year high against six currencies. Gold’s drop this year spurred physical buying, according to T&K Futures and Options.
Gold slid 25% this year, wiping $61.2-billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value as the US federal reserve said it may slow bond buying this year. Prices also slumped because unprecedented stimulus failed to spur US inflation.
Expectations for gains in US consumer prices, as measured by the break-even rate for 10-year Treasury Inflation Protected Securities, fell 15% this year.
“We have seen again some good demand and some fresh speculative buying on the back of the Chinese inflation figures,” David Govett, head of precious metals at Marex Spectron Group in London, said on Tuesday in a report. “We are still seeing some good physical demand down at these levels.”
Gold for immediate delivery rose 1.6% to $1 256.34 an ounce by 9.40am in London. Prices reached $1 260.70, the highest since July 2. Bullion for August delivery gained 1.6% to $1 254.50 on the Comex in New York. Futures trading volume was 30% above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold as much as doubled from 2008 to a record $1 921.15 in September 2011 as the US central bank led nations in cutting interest rates and buying debt. Gold exchange-traded products holdings fell to 1 993.8 metric tonnes on Monday, falling below 2 000 tonnes for the first time since May 2010, according to data compiled by the Bloomberg show.
“The near-term outlook for gold remains downbeat,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said on Tuesday in a report. “Subdued inflation pressures in the US, a stronger dollar, reduced macro risks, the uncertainty over the quantitative-easing finishing line and expectations of a gradual gain in global growth rates are all likely to further deter market participants from committing to gold.”
Silver for immediate delivery, rose 1.6% to $19 4062 an ounce in London. It’s the worst performer in the Standard & Poor’s GSCI gauge of 24 commodities this year. Palladium added 0.7% to $701.88 an ounce and traded above its 200-day moving average today for the first time since June 19. Platinum gained 0.7% to $1 368.93 an ounce in London.
Miners at Anglo American Platinum, the world’s biggest producer, returned to work following a strike, Bongeka Lwana, a spokesperson for the company, said in an emailed statement today. About 5 600 workers went on strike at two of the company’s mines in South Africa, demanding that suspended union officials were reinstated and planned job cuts scrapped. – Bloomberg