Wednesday, April 16, 2014

Gold, copper edge higher on relief over China data

By William L. Watts

NEW YORK (MarketWatch) — Gold and other metals futures edged higher Wednesday, finding modest support after data showed China’s economy slowed somewhat less than feared in the first quarter.

Gold for June delivery /quotes/zigman/698029/realtime GCM4 +0.41%  rose $1.60, or 0.1%, to $1,301.90 an ounce. May silver /quotes/zigman/10480467/realtime SIK4 +1.37%  rose 2 cents or 0.1%, to $19.51 an ounce.

Chinese government data showed gross domestic product expanded 7.4% in the first quarter compared with the same period a year earlier. That’s down from a growth rate of 7.7% in the previous quarter and below the Chinese leadership’s target of “about 7.5%” but slightly above economists’ forecasts. On a quarterly basis, growth slowed from 1.7% to 1.4%.

Analysts said the figures offer only a limited amount of comfort.

“The commonest reaction appears to be relief that growth has not slowed further. However, the quarter-on-quarter numbers underline the loss of momentum and there are some other worrying signs in the detail, especially in the (commodity-intensive) property sector. Hopes of substantial policy stimulus are also likely to be disappointed,” wrote Julian Jessop, head of commodities research at Capital Economics in London.

Jessop argued that risks relative to expectations priced in commodity markets appear skewed to the downside. Even with a rebound in quarterly growth to a rate of 1.7% would still leave annual growth on track to settle close to 7%, he said, which would be below the government’s target and the consensus of around 7.5%.

“Overall, there is probably still some more ‘bad’ news to come from China. This would be consistent with our view that there will be one final leg down in the prices of industrial metals—notably copper—before a sustained recovery,” Jessop said.

High-grade copper for May delivery /quotes/zigman/678457/realtime HGK4 +2.13%  rose 3 cents, or 1%, to $3.02 a pound.

June palladium /quotes/zigman/14634051/realtime PAM4 +0.95%  rose $3 to $798.90 an ounce, while July platinum declined $6.10, or 0.4%, to $1,438.50 an ounce.

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