Gold prices hold gains in Asia as China prices data stronger than seen

Gold prices stayed positive in Asia on Friday after stronger than expected gains in China consumer and producer prices data.Gold for December delivery on the Comex division of the New York Mercantile Exchange rose 0.08% to $1,258.55 a troy ounce.

Also on the Comex, for December delivery gained 0.07% to $17.473 a troy unce and edged up 0.05% to $2.124 a pound.

China reported CPI for September with a gain of 0.7% , well above the 0.3% pace seen and led by food prices, and a 1.9% increase , faster than the 1.6% rise expected. As well PPI data rose 0.1% , compared to a decline of 0.3% expected for the first positive growth since February 2012.

“The domestic industrial supply and demand situation is trending better, with improving signs in inventories and sales by key industries,” due to government policies to stabilize growth, reduce excess capacities and inventories, Yu Qiumei, the bureau’s senior statistician wrote, said in a statement.

Improving international commodity prices also supported the price gains in domestic industrial products, Yu said.

Earlier in Japan, the PPI for September fell 3.2% as expected and came in flat, compared to a 0.1% gain seen.

Overnight, gold prices held on to overnight gains during North America’s session on Thursday, as the U.S. dollar and global stock markets pulled back after surprisingly weak Chinese trade data raised fresh concern about the world’s second-largest economy.

China’s September exports plunged, while imports unexpectedly shrank after picking up in August, suggesting signs of steadying in the world’s second-largest economy may be short-lived.

Exports tumbled 10.0% from a year earlier, far worse than forecasts for a decline of 3.0%, while imports dropped 1.9%, compared to expectations for a gain of 1.0%. That left China with a trade surplus of $41.99 billion for the month, the lowest in six months, the General Administration of Customs said on Thursday.

The downbeat figures triggered a fall in global equities and a drop in the U.S. dollar and gave a lift to safe-haven assets, such as gold and the yen.

China is the world’s largest copper consumer, accounting for nearly 45% of world consumption.

Meanwhile, minutes of the Federal Reserve’s September policy meeting released on Wednesday showed several voting members of the policy committee judged a rate hike would be warranted “relatively soon” if the U.S. economy continued to strengthen.

Markets are currently pricing in around a 69.8% chance of a rate hike at December’s meeting, according to Investing.com’s Fed Rate Monitor Tool.

Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.

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