COM: China data is bullish, but gold, Oil, copper down
Spot Gold prices traded lower in today’s trading session as strength in the dollar put pressure on gold prices. The US dollar gained 0.6% till 5.00 pm IST as risk aversion set the tone in the financial markets and led to higher demand for the low-yielding dollar. Though economic data from China was bullish it led to concerns that the world’s fastest growing economy could curb lending. The yellow metal could continue to trade with a negative bias as strength in the dollar will provide direction to prices.
Copper prices slipped 0.7% on the LME till 5.00 pm IST as a firm dollar and worries that China’s economic growth may come under check put pressure on prices. Prices of copper on the LME traded below $7500 today as inventories gained a whopping 8000 tonnes today to touch 534,650 tonnes, the highest since early March 2009.
Economic data from China indicated that the country’s GDP growth for the year 2009 was higher than expectations, reaching 8.7%. China’s fourth-quarter GDP for 2009 increased 10.7% and the country’s industrial output grew 11% for 2009. Though this data is positive, base metal prices may feel pressure on the downside as this sharp growth in GDP could demand further stringent monetary policy tightening by the Chinese government.
Crude Oil prices declined 1.5% till 5.00 pm IST ahead of the weekly report by the US Energy Department which is forecast to show that oil inventories increased for a third week. The report is expected to show that crude oil stockpiles climbed 2.4 million barrels in the last week ended 15th January from 331 million in the prior week. Inventory data and movement in the dollar will help to provide further direction to crude oil. If the inventory data comes in as per expectations then oil prices could feel further pressure on the downside.
Outlook
The US is expected to announce economic data on unemployment claims, Philadelphia Fed manufacturing index, CB leading index, inventory data on crude oil and natural gas storage today. Positive data could help provide some cushion to the downside to prices of Gold, Copper and Crude oil. But negative data could boost the dollar and lead to further selling pressure in Gold, Copper and Crude oil prices today.
