China Economic Data Realease Rebounded Gold and Copper
Gold and copper rebounded in Asia on Friday after China reported solid GDP, retail sales and industrial output and the Fed chief showed caution in remarks about the growth capacity of the economy. Gold for February delivery on the Comex division of the New York Mercantile Exchange rose 0.43% to $1,206.65 a troy ounce. Copper futures gained 0.27% to $2.618 a pound. China’s gross domestic product (GDP) grew 6.8% year-on-year in the fourth quarter, slightly beating expectations by analysts of 6.7% growth for the calendar year, but in line with estimates from the head of China’s state planning agency.
The figures likely signaled that China’s economic growth is starting to stabilize as it transitions from heavy manufacture to domestic-led consumption. For the quarter-on-quarter GDP figure the increase of 1.7% as expected. Industrial production gained 6.0%, a tick below the 6.1% rise seen, while retail sales jumped 10.9%, beating the 10.7% increase expected.
Earlier, Federal Reserve Chair Janet Yellen said that running a “hot” economy for an extended period would be a risk. “I think that allowing the economy to run markedly and persistently “hot” would be risky and unwise,” Yellen said in remarks prepared for delivery to the Stanford Institute for Economic Policy Research. While there are no signs as yet that the Fed is behind the curve or the economy is in danger of a sudden surge in inflation, she said, “I consider it prudent to adjust the stance of monetary policy gradually over time.”
Overnight, gold prices remained under pressure during U.S. morning trade on Thursday, holding on to earlier losses as investors awaited more comments from Federal Reserve Chair Janet Yellen for fresh clues about the timing of the next rate hike. In remarks delivered to the Commonwealth Club in San Francisco on Wednesday, Yellen said it would “makes sense” for the U.S. central bank to gradually lift interest rates with the U.S. economy close to full employment and inflation headed toward the Fed’s 2% goal. The Fed chief said that she and other Fed policymakers expected the central bank to lift its key benchmark short-term rate “a few times a year” through 2019. That pace could change depending on how the outlook for the economy develops, Yellen cautioned. The Fed indicated last month that at least three rate increases were in the offing for 2017, according to a forecast of interest rates from members of the central bank, known as the dot-plot.
However, traders remained unconvinced. Instead, markets are pricing in just two rate hikes during the course of this year, according to Investing.com’s Fed Rate Monitor Tool.
Meanwhile, global financial markets will continue to focus on U.S. President-elect Donald Trump as he takes the Oath of Office and offers his inaugural address on Friday. Trump will be speaking at a pre-inauguration event in Washington DC at 11:15AM ET (16:15GMT) on Thursday.
Investors will welcome any detail he may give on his promises of tax reform, infrastructure spending and deregulation, as well as insight regarding policies on China and the domestic economy. Trump has been credited with being a major catalyst behind the market’s impressive rally since election day, although he has yet to outline his economic policies in detail.