At one point on Friday, bullion was a bit more than $5 from striking that milestone price. But it tracked the downward drive of stocks after economic data released by the U.S. indicated consumer sentiment presently is hovering about its lowest level in more than 12 months.
Demand from China, the globe’s second-largest consumer of the yellowish metal, underpinned prices on Friday. The Asian nation is preparing to celebrate its new year next month and it released economic data that was better than anticipated.
And the Chinese gold market merits being watched very closely, senior broker Kurt Pfafflin with Daniel’s Trading said.
“The People’s Bank of China is highly secretive and has not updated their official Gold Holdings in over 3 years,” the senior broker said. “But they’ve been accumulating big time. In 2012 alone, China imported more gold from Hong Kong than the European Central Bank’s entire official 502.1 tons of holdings.”
At 2:12 p.m. on Friday, gold futures fell 0.16 percent, a $2.69 fall to $1,684.90 per troy ounce.
Chinese economic growth
The Asian nation, which hosts the globe’s second largest economy – trailing only that of the U.S., saw the fourth quarter of last year develop at a pace of 7.9 percent, Reuters reports.
That gross domestic product figure is a little higher than what economists anticipated from the country as it aims to bounce back from the rough patches of last year.
“For gold we had some good physical demand from Asia, particularly China, after better-than-expected GDP data,” analyst Howard Wen with HSBC told the news source. “We expect physical buying to pick up ahead of the Chinese New Year on Feb. 10.”
U.S. central bank to provide boost?
The U.S. could be poised to resume its monetary stimulus program, which typically supports gold prices.
Concerns are growing about fiscal circumstances in the nation hosting the globe’s largest economy and gold is one strategy of hedging against inflation and nebulous circumstances.
Additionally, political leaders in the U.S. once again are preparing to take up negotiations for the situation with debt ceiling, which Pfafflin said is likely to impact the price of gold futures.
“The current legal limit of $16.4 trillion on the federal government’s debt would need to be raised in the next few weeks by another $2.4 trillion,” the senior broker said. “President Obama has declared he won’t negotiate it, Senate Leader Harry Reid said they’ll raise it. That would set the new debt limit at $18.794 trillion.
Yearly gains campaign begins anew
Gold is less than three weeks into another drive toward achieving yearly gains.
In 2012, bullion increased in value 7.1 percent, according to Bloomberg.
The monetary stimulus programs of the U.S., Europe and Japan were large drivers of gold’s upward drive, which resulted in the precious metal marking a 13th consecutive year of annual gains.
Yet the climb could have been better, the senior broker said.
“The fourth quarter last year and 2012 overall was very disappointing for gold and silver bulls,” Pfafflin said.
Forbes magazine reports a Kitco News Gold Survey indicates 18 of 33 participants forecast the yellowish metal to gain value next week.
The poll, which inquired of dealers, investment bankers, futures traders, money managers and technical chart analysts, indicated signs for gold’s rise are favorable.
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