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  • Aug 9th, 2013
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Gold jumped 2 percent to above $1,300 an ounce early on Thursday as surprisingly strong rebounds in China's exports and imports sparked economic optimism, lifting bullion's inflation-hedge appeal. Silver and platinum group metals also rallied after data showed Chinese imports of industrial commodities and raw materials rose in July and the world's second-largest economy showed signs of stabilising after more than two years of slow growth.

"It looks like things in China are moving into the right direction, so that means deflationary forces are brushed aside and inflationary forces are more popular now," said Axel Merk, portfolio manager of Merk Funds, which has $500 million in currency mutual-fund assets. Gold prices also benefited from the US dollar's fall to a seven-week low against a basket of currencies.

Traders said pent-up buying underpinned gold as recent inconclusive economic data and comments from Federal Reserve policymakers raised doubts about when the US central bank will begin reducing stimulus. Spot gold rose 2 percent to $1,313.35 an ounce by 12:02 p.m. EDT (1602 GMT), having hit a session high of $1,313.95, $1 above key technical resistance at its 50-day moving average.

Bullion had traded as low as $1,180 an ounce in late June on fears of massive fund selling as the Fed looked set to cut its bond-buying stimulus as early as September. US gold futures for December delivery were up $22.80 an ounce to $1,308.90, with trading volume on track to finish below its 30-day average, preliminary Reuters data showed. Among other precious metals, silver was up 3.5 percent at $20.24 an ounce. Platinum rose 3.3 percent to $1,482.25 an ounce, while palladium gained 2.4 percent to $738.50 an ounce.

Copyright Reuters, 2013


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