Gold up as Chinese trade data disappoints, US dollar pares gains

The spot gold price inched higher during Asian trading hours on Thursday, October 13, after China released disappointing September trade data while the US dollar index pared its gains after reaching a seven-month high earlier in the day.

Spot gold was last at $1,258.80-1,259.10 per ounce, up $3.65 from Wednesday’s close. Trading ranged at $1,253.15-1,260.10 so far on Thursday.

Chinese trade figures announced by the country’s General Administration of Customs on Thursday showed China’s overall exports falling 10 percent and imports slipping 1.9 percent in September, both on a year-on-year basis in US dollar-denominated terms.

The numbers deteriorates from a 2.8-percent decline for exports and 1.5-percent rise for imports in August.

Describing the international environment as “severe and complicating”, the Chinese customs said in its statement that China’s export development continue to face major difficulties amid a decline in trade with main trading partners like the US and ASEAN countries.

China’s US-denominated trade balance came in at $42 billion in September, below expectations of $53.1 billion.

Meanwhile the US dollar index climbed to a seven-month high 98.12 earlier on Thursday but has since pared its gains and was last at 97.81, down 0.17 percent from Wednesday’s close.

Further evidence of a possible US rate rise this year after the release of the Federal Open Market Committee’s (FOMC) September meeting minutes on Wednesday has lifted the US dollar, Angus Nicholson, a market analyst at IG, said.

“The minutes for the September Fed meeting show that it was a pretty close decision to keep rates on hold, making it increasingly likely that we will see a rate hike in December,” he said.

The minutes provided little new news as the FOMC in September had signalled their intention to raise rates again in 2016, and that every meeting was ‘live’, ANZ Research said on Thursday morning.

“[The minutes is] therefore unlikely to result in the market taking the chances of a November hike any more seriously, but they also provided nothing to stand in the way of the current market moves, that is, increasingly pricing in a December hike but being a little nervous about it,” the bank said.

On Wednesday, Fed Fund futures indicate a 70-percent chance of a 25-basis-point rise in December, according to the CME FedWatch Group tool.

“Gold still looks vulnerable in the short term and we wouldn’t rule out a correction back towards $1,180-1,220,” James Moore, a research analyst at FastMarkets, said. 

“But the fact that investors have viewed this as a dip-buying opportunity suggests long-term bullish sentiment remains intact,” he noted.

In US data released Wednesday, the Jolts job openings disappointed at 5.44 million, the fewest amount of openings this year and below the

forecast of 5.79 million.

US data due for release today includes the weekly unemployment claims, import prices and crude oil inventories.

In equities, the Shanghai Composite fell 0.07 percent to 3,056.48 so far on Thursday.

In other commodities, the Brent crude oil spot price fell 0.46 percent to $51.40 per barrel, and the Texas light sweet crude oil spot price slipped 0.2 percent to $49.72 recently on Thursday.

In other precious metals, silver was last at $17.56/17.58, up $0.075. Platinum rose $4 to $941/947, and palladium increased $1 to $642/650 recently on Thursday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 273.90 yuan per gram, and the December silver was flat at 3,989 yuan per kilogram.

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