Fundamental Precious Metals (2011-04-15)

<h3>Gold surge to record on inflation data from China</h3>
By @ibtimes on

Gold surge to record on inflation data from China

Gold surged to a record high as inflation in China accelerated more than economists forecast, spurring demand for the metal by investors as they hedge against inflation and seek haven.

As of 06:11 GMT; Bullion for immediate delivery rose to 1,476.49 an ounce, compared with the opening levels of 1,473.87, while setting a high of $1479.27 an ounce, and a low of $1,472.30 an ounce. Futures gained 0.29% to trade at $1,476.700 an ounce.

China's real GDP expanded 9.7% in the first three month of the year, compared with a previous expansion 9.8% in the 4th quarter of 2010, whereas the actual reading is higher than analyst's forecasts of 9.4%.

Meanwhile, inflation, according to the CPI index, rose by 5.4%, from the previous rate of 4.9 percent.

Investor's desires to hedge against inflation forced the metal to set new record, while further bullishness is expected as inflation threats continue to mount in Europe to a point that threatens recovery.

To control inflation; China hiked rates for the third time this year, where the same move was adopted by the ECB as it hiked rated during April's meeting by 25.0 basis points.

Inflation expectations have been rising in China even as the central bank hiked rates. The Chinese economy has been growing at a 20% rate over the past period, and much of that is tied to inflation that has entered a crisis territory where inflation currently stand at double-digits for many products and services in the country.

Investors believe that China's central bank will need to hike rate by at least 3.0 percent to curb inflation.

The US dollar index, which tracks the performance of the currency against six-majors, traded at 74.75, compared with the opening levels of 74.71 while setting a high of 74.81 and a low of 74.65. Gold usually moves inversely with the dollar as commodities are a dollar weighted index.

Technically speaking, gold's trend remains to the upside as far as the support at $1,390.00 an ounce remains intact and the dollar continues to weaken, while the 100-day MA support level is set at 1,374.00 an ounce.

Gold's trading remains above the support at 1,445.00 an ounce, where if breached it will pave the way for the pair to test the support at %1,425.00 an ounce, but the general trend remain to the upside with initial targets set at 1,480.00 an ounce and probably achieve new historic highs above those levels.

The S&P GSCI index closed trading at 736.23; gaining by 0.98 points, while the RJ/CRB commodity index closed at 360.66, after adding 1.11 points.

Major Metal Fixing

As for metal Fixes (Apr 14); Gold fixed at AM Fix was set at $1,457.50 an ounce while the PM fixing (Apr 14) was set at $1,465.75 an ounce; meanwhile silver fixing was set at $40.67000 an ounce and Platinum AM Fixing (Apr 14) was set at $1,784.00 an ounce, and at 1,772.00 an ounce during the PM fixing (Apr 14); finally ending with Palladium AM fixing set at $771.00 at (Apr 14) AM fixing, while the PM fixing (Apr 14) was set at $763.00 an ounce.

Other Metals

Silver for immediate delivery traded at $42.36 an ounce compared with the opening levels of $42.13 an ounce, while setting a high of $42.41 an ounce and a low of $42.03 an ounce. Silver future contracts traded higher by 1.45% or 0.606 to trade at 42.270 an ounce

Platinum for immediate delivery traded flat at $1,789.000 an ounce, while Palladium rose by $2.0 to trade at $771.00 an ounce.

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