Metals Trade In The Green To Kick Off The Week

Gold opened the week on a positive note as Asian traders pushed it up almost $11.00 which has become the typical daily move, gold will most likely give back these gains in the European session. Gold is currently exchanging at 1288.55. There has been little response to the mix of Chinese data released this morning, with industrial production missing expectations, retail sales soaring and GDP barely meeting expectations. Gold extended gains after posting its biggest weekly percentage increase in nearly two years, as fears eased that the US Federal Reserve would wind down its stimulus programme early.

Fed Chairman Ben Bernanke said last week that a highly accommodative policy was needed for the foreseeable future, bolstering bullion which is often seen as a hedge against inflation. “People are still buying after Bernanke’s assurance,” said a Hong Kong-based trader. “They were expecting the tapering (in stimulus) to begin in September but now they think there is a possibility of it happening only next year.”

Prices were also buoyed as Chinese GDP data for the second quarter matched expectations at 7.5 per cent. Gold futures eased on Friday but notched its biggest weekly advance in nearly 2-years, as fears of an imminent winding down of the US Federal Reserve’s monetary stimulus eased for now.

Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 939.07 tons, as on July 10. Silver holdings of ishares silver trust, the largest ETF backed by the metal, increased to 10,185 tons, as on July 12. Silver traders have been taking advantage of a weaker US dollar and low prices to buy the metal on the cheap. Overall industrial metals have been faring better than precious metals. Silver is trading above the 20 level this morning at 20.015 as Chinese data was not as disappointing as expected. Copper also is gaining this morning and is trading at 3.161.

The US dollar advanced against major rivals on Friday, gaining against the euro on worries about Portugal and France, though a gauge of the dollar’s value ended lower for the week. The ICE dollar index, rose to 82.997 on Friday and added this morning to trade at 83.10

The dollar bounced back from a steep sell-off on Friday while world stock indexes were mostly steady as equities markets took a break from their recent rally and investors focused on mixed US corporate earnings.

Copper gained in the earlier session before closing lower, after comments from a top Chinese government official triggered concerns that economic growth in China could fall short of targets. Copper futures for Sept. delivery closed down by 0.7% at $3.155. As mentioned above, copper has gained a bit after Chinese data was not as bad as traders were predicting on Friday.