Gold and SPDR Gold Trust (ETF) (NYSEARCA:GLD) prices closed higher in Asia and were rising in early trading in Europe and the US on Thursday. Unexpectedly strong economic data flow from China and European Central Bank policy meeting today are still weighing on the trade of the yellow metal today, however.
Prices of gold futures for December delivery rose 0.11% to close at $1,351.05 a troy ounce in Asia. In Europe, gold was seen advancing 0.20% in early morning trading having attained a session high of $1,352.45.
Gold closed at $1,349.20 overnight in North America.
Mixed U.S. economic data
Gold prices have soared in the recent days amid a series of mixed economic data flowing out of the U.S. A lackluster labor report dimmed hopes of a near-term interest rate increase by the Federal Reserve in particular.
Chinese data
China reported that its trade balance surplus for August shrank to $52.05 billion compared to $58 billion that economists expected. The world’s second largest buyer of gold said its exports declined 2.8%, better than the 4% decline that analysts modeled and imports rose 1.5%, though economists expected imports to fall 4.9%.
China’s economic data added to the optimism of a rebound in global commodity prices.
Eyes on ECB stimulus action
Gold traders can be seen bidding gold prices higher as they wait for the outcome of the ECB’s Thursday policy meeting. The central bank has recently been known for its aggressive bond buying and analysts believe it could expand its stimulus actions to include stock buying as well.
Increases in bond or stock purchases by the ECB would signal continued economic uncertainty in Europe, thus driving up the appetite for safe-haven assets such as gold.
“[ECB stock purchases] would be justified: European equities are undervalued, while there is a bubble—that the ECB continues to inflate—in bonds,” noted Patrick Artus Natixis.
The move would also help to create artificially high stock prices, since they would be bought with created money.
Favorable currency movement
Gold prices are also gaining on favorable currency movements. USDJPY slid 0.16%, while EURUSD advanced 0.23%. GBPUSD moved up 0.14% at a time when AUDUSD rose 0.60%. A weaker dollar makes gold cheaper for foreign buyers.
However, some analysts see the greenback’s dip as a temporary. “[The dollar is still] the most attractive currency play and sustained weakness in the dollar from current levels is unlikely,” observed Peter Hug of Kitco Metals.