Gold gains following China data

Gold traded overall higher on Monday, offsetting some of last weeks declines after the Bureau of Labor Statistics reported the U.S. economy has created more jobs than expected, although the unemployment rate also rose by 0.1%. This spurred concern about a premature scale back of Feds Quantitative Easing program, which caused gold to drop 2.2% in U.S. trading on Friday, the worst close since May 15.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 381,55 a troy ounce at 6:27 GMT, marking a 0.10% decline on the day, but still higher than Fridays close at around $1 378.

Negative news from China supported gold prices as investors to cut holdings in raw materials as copper and rubber and invest in the precious metal. After Chinese officials revealed information on manipulators who used currency conversions to boost export data, much lower figures were expected than forecast earlier.

Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong commented for Bloomberg on the fake data crackdown: “The crackdown from China’s foreign-exchange authorities on fake invoicing will bring the inflated export growth down to the real trend, which is single digits.”

Chinese exports jumped by only 1% in May and shipments to the U.S. and European Union, the Asian nations two biggest export targets, declined for a third straight month.

Chinas imports were projected to gain 6% but official figures strayed well below and showed a 0.3% decrease, marking a ten-month low. Consumer inflation shrank to 2.1%, mismatching a 2.9% forecast and Producer Price Index (PPI) tumbled 2.9%, above expectations of a 2.5% decrease. The M2 money supply jumped 15.8%, missing 15.9% expectation. Retail Sales met projections of a 12.9% gain and so did Industrial Production with a 9.2% increase on an annual basis.

Chae Un Soo, a metals trader at Korean Exchange Bank Futures Co. in Seoul, said by phone for Bloomberg: “Investors are cutting copper and some other agricultural commodities because of the China data and buying gold instead.” He expects gains to be limited at $1 420 a troy ounce due to Feds monetary stimulus speculation.

Alan Greenspan, a former Fed chairman, said last week on CNBC Television that Fed needs to begin scaling back Quantitative Easing program and move toward stopping the purchases altogether.

Elsewhere on the precious metals market, silver, platinum and palladium are marking losses on the day. Silver for July delivery traded at $21.575 at 6:54 GMT, down 0.77%. Platinum, which is broadly used in industrial production as well for jewelry, stood at $1 493.65 a troy ounce. Platinum July contracts lost 0.6% for the day and ranged between session high at $1 502.50 and low of $1 491.90. Palladium for September delivery traded at $757.50 an ounce at 6:57 GMT, marking a 0.49% loss for the day.