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Gold Rises on China's Growing GDP

Release Date: 
Friday, January 18, 2013

The price of gold rose today on positive economic data from China which boosted optimism for the global economy and provided support for equities and commodities.  Gold was $3.50 higher at 6:38 a.m. Pacific Time on the New York Spot Market, trading at $1,691.60 per ounce.  Spot silver was $0.27 higher at $32.10 per ounce.  (Click here for the most current spot prices.)

China's economy grew at 7.9 percent in the fourth quarter of 2012, faster than the 7.8% GDP rate expected by economists. The fourth quarter data confirm “that the worst is probably over for the economy and that China has avoided a hard landing,” IHS Global Insight senior economist Xianfang Ren said.

"Gold is rallying along with other commodities and other precious metals, with stronger risk appetite luring some speculative investment into the yellow metal's market," Commerzbank analyst Carsten Fritch said.

A sustained Chinese recovery could help drive stronger gold demand in China, one of the world's largest gold buyers.  "The physical market is off to a good start this year, with many indicators so far pointing to a positive demand story," UBS said.  "We believe that China's growth momentum will rise at a faster pace in the coming two quarters," ANZ analysts said in a report.

China’s industrial output in December rose 10.3% from the year-earlier period, in line with economists’ expectations and higher than the 10.1% rise recorded in November.  December retail sales were up 15.2% compared to a year ago, above the 14.9% forecast in a Reuters survey and an improvement from November’s 14.9% increase.

(Sources:  “Gold Higher in Asia; Precious Metals Hold in Ranges,” Wall Street Journal, January 18, 2013; China’s economy grows more than expected,” Marketwatch, January 18, 2013;  “Gold steady after China economic data,” Marketwatch, January 18, 2013; “PRECIOUS-Gold firms as Chinese data lifts stocks, commodities,” Reuters, January 18, 2013)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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