Gold Working Higher, Asian Stocks Down Posted by James Randolph on July 09, 2012
July 9, 2012 – The price of gold was slightly higher in East Asian markets during intraday trading on Monday, partially a reflection of Asian flight to gold’s safe haven asset status during a pronounced sell off in Asian stocks.
Comex gold future’s contracts for August delivery were up 0.1 percent at $2 to $1,581.00 per troy ounce.
The gains made on Monday have been subdued compared with a $30.50 decrease in price during Friday’s normal trading session of the Comex division of the New York Mercantile Exchange, which realized a loss of 1.6 percent.
Stocks in East Asian markets were decidedly lower Monday, a reaction to the underperforming US jobs report which was released on Friday and the announcement of rate cuts by China’s central bank last week.
The official government statistics bureau released data Monday revealing consumer-price inflation eased down to 2.2 percent for the month of June, the lowest level it has seen in 29 months. Meanwhile, producer prices continued a downward motion and became negative with a contraction of 2.1 percent after a 2.1 percent contraction in the month of May.
China’s central bank also took the opportunity last Thursday to announce a benchmark rate cut at the conclusion of the European Summit. As the leaders of Europe announced to the press that they would again cut rates, the relatively surprising news from China took a sideline in world news.
HSBC analysts called the inflation data out of China “fast falling” and said they have put down track for a shift in policy. China has taken many measures to curb its growth and its inflation over several years and the Chinese have been relatively successful at these measures.
“Beijing policy makers are responding actively to hold up growth,” the analysts with HSBC said in a written note.
Other precious metals performance was mixed. Silver for September delivery edged upward with a gain of 1 percent, 26 cents, to $27.18 per troy ounce.
Silver had been coupled with gold during the declines on Friday, losing 2.4 percent during regular trading on the Comex Friday.
HSBC took the opportunity Friday to restate its optimistic medium-term projections for gold. The latest jobs data keeps a possibility of further quantitative easing a real consideration for HSBC.