Stock Market Watch

Gold Prices Fall as China’s Downbeat Economic Data Strengthens Dollar; Silver Prices also Slip

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Gold prices edged down on Friday as weaker than expected first quarter economic data from China boosted the dollar. However, loses were modest as weak economic data heralds possible monetary easing. Meanwhile, silver prices also edged lower.

The world’s growth engine China experienced a fifth quarter of slowing growth as the GDP for first three months of 2012 turned out lower than expected. The gross domestic product reading showed a growth of 8.1%. The dollar index, which measures greenback performance against the basket of six major traded currencies, climbed up 0.2 percent against major commodity currencies that were disappointed at the China’s sluggish GDP data, putting some pressure on dollar-priced commodities including gold.


According to Ronald Leung, a dealer at Lee Chong Gold Dealers in Hong Kong, “The slowdown in China’s economy dampened commodities as well as commodity currencies such as the Australian dollar”.

While U.S. gold slid 0.3 percent to $1,675.50, Spot gold dropped to an intra-day low of $1,671.44 after the data release, but recovered some losses to $1,674.19 by 0355 GMT.

Reuter’s Market analyst Wang Tao’s technical analysis suggests that spot gold might face resistance at $1,680 an ounce.

Future of gold not glittery

According to Dominic Schnider, head of commodity research at UBS Wealth Management in Singapore, although China’s lower-than-expected GDP data could lead to expectation of more quantitative easing from Beijing, gold demand growth, on the contrary may fall short of the pace shown the past couple of years. Lower demand of gold could weigh on gold, believes Schnider.  Commenting over near short term, Schnider said to CNBC, “We are still looking at a break of the uptrend in the second quarter and prices to fall towards $1,520 as a result”.

Meanwhile, silver also fell by 0.8% to $ 32.27, after gaining 3% in the previous session.

 

 

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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