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Gold fell on Wednesday, holding near the 2019 lows touched in the previous session, as economic growth data from China assuaged concerns about global growth and drove investors into riskier assets. Spot gold slipped 0.2 percent to $1,274.15 per ounce as of 1:40 p.m. EDT (1740 GMT), after having fallen as much as 1.2 percent to $1,272.70, its lowest since Dec. 27, on Tuesday.

US gold futures settled unchanged at $1,276.80. "The pretty good Chinese data implies the concerns of a slowdown in global growth have been mitigated to a great extent, which should elevate risk appetite, in turn pressuring gold," said Bart Melek, head of commodity strategies at TD Securities in Toronto.

China's economic growth in the first quarter remained steady at 6.4 percent, topping expectations for a 6.3 percent expansion. On the technical front, gold's break below the psychologically significant $1,300-per-ounce mark and other key support levels, including the 100- and 50-day moving averages, signalled a further downside to prices, analysts and traders said.

Further weakness in gold is possible in the near term, potentially testing the $1,259 level, which is likely to hold, Commerzbank analysts wrote in a research note. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have fallen 4.5 percent this year.

On the flip side, gold was likely to climb toward $1,400, while silver could rise to $17 per ounce by year-end since overall weak global growth could take a toll on both equity prices and risk appetite, analysts at Capital Economics said in a note. "That said, we expect risk appetite to gradually return as the US economy picks up," it said.

Silver rose 0.1 percent to $14.99 an ounce. Meanwhile, spot palladium jumped more than 4 percent to a near two-week high at $1,406.81 an ounce. The metal had soared to an all-time peak of $1,620.53 last month driven by a stark supply deficit. Platinum gained 0.7 percent to $883.

"Strong GDP data from China showed the economy is starting to hit back up again ... greater growth will see the economy expanding, translating into more demand for vehicles, in turn boosting demand for both platinum and palladium," said Phillip Streible, senior commodities strategist at RJO Futures.

Both metals are primarily consumed by automakers for catalytic converter manufacturing, but platinum is more heavily used in the diesel vehicles that have fallen out of favour since the Volkswagen emissions-rigging scandal broke in 2015.

Copyright Reuters, 2019


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