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Gold Futures Decline

Gold Futures DeclineGold Futures Decline

Gold futures declined on Tuesday, as sentiment was boosted amid a global stock market rally, despite grim trade data from China that caused further volatility in Asian markets.

Gold for December delivery on the Comex division of the New York Mercantile Exchange shed $2.40, or 0.21%, to trade at $1,119.00 a troy ounce during European morning hours. US markets were closed on Monday for the Labor Day holiday, Investing.com reported.

Data released earlier showed that China’s trade surplus widened to $60.2 billion last month from $43.0 billion in July, compared to estimates for a surplus of $48.2 billion.

Chinese exports slumped 5.5% from a year earlier, compared to forecasts for a decline of 6.0%, while imports plunged 13.8%, far worse than expectations for a drop of 8.2%.

Despite the weak data, the Shanghai Composite rallied more than 4.5% in the last hour of trade to erase the session’s losses and end up 3%. The upbeat sentiment carried over to European markets, where Germany’s DAX, France’sCAC 40 and London’s FTSE 100 were all up almost 2%.

In the US, Wall Street pointed to strong gains at the open, with the Dow futures up 250 points.

Gold prices also struggled amid ongoing uncertainty about whether the Federal Reserve will increase interest rates later this month when it meets on September 16-17.

Friday’s US jobs report failed to provide much clarity on when the US central bank will decide to raise short term interest rates. The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Elsewhere in metals trading, copper for December delivery on the Comex division of the New York Mercantile Exchange rallied 6.6 cents, or 2.87%, to trade at $2.378 a pound.

Copper’s gains came as a sharp rebound in Chinese equity markets helped soothe investors’ tattered nerves.

China’s copper arrivals in August totaled 350,000 metric tons, little changed from a month earlier, indicating that demand for the red metal held up last month despite recent market turmoil.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Financialtribune.com