Gold slips on strong China economic data

Bengaluru — Gold prices fell on Friday as robust economic data from China boosted hopes of a swift recovery, though bullion was set to rise more than 1% on the week as the US dollar and Treasury yields pulled back from recent highs. China’s March factory gate prices rose at their fastest annual pace since July 2018, beating estimates.

Spot gold fell 0.2% to $1,751.86/oz by 4.23am GMT, having hit its highest since March 1 at $1,758.45/oz on Thursday. US gold futures slipped 0.3% to $1,753.40/oz. Still, the metal has gained nearly 1.5% this week, after two weeks of losses.

“The [falling] dollar and Treasury yields have helped gold this week along with the Fed’s dovish tone, that has been topped with lockdowns in Europe and parts of Asia with some negative vaccine results,” said Brian Lan, MD at dealer GoldSilver Central. “On the other side, a strong data set from the US have led some short-term investors to book some profits after the metal climbed to a one-month high on Thursday.”

Recent robust economic data, driven by huge stimulus measures, has dulled safe-haven demand for bullion. Federal Reserve chair Jerome Powell on Thursday signalled the central bank is nowhere near to reducing its support for the US economy and cautioned that the anticipated price increase this year is likely to be temporary.

“The likely rise in April inflation could support gold prices in the coming weeks, especially if it rises faster than bond yields. In the more medium term, the rise in bond yields is likely to put renewed pressure on gold,” Fitch Solutions said in a note.

Rising bond yields increase the opportunity cost of holding non-interest bearing gold. Silver fell 0.3% to $25.35/oz.

Palladium was steady at $2,625.03/oz. Platinum fell 0.6% to $1,222.81/oz.

Reuters