Gold up after Chinese data supporting the yuan against dollar

Gold prices rose today, Friday, with the dollar falling against the yuan after promising economic data from China that strengthened recovery hopes in the world’s largest consumer of gold, although the possibility of the Federal Reserve (the US central bank) raising interest rates again keeps investors in a state of anxiety.

According to Reuters, by 0537 GMT, gold prices in spot transactions rose 0.3% to $1,915.27 per ounce, and US gold futures contracts increased 0.2% to $1,936.90.

The yuan rose to its highest levels in two weeks against the dollar after data showed that Chinese factory production and retail sales in August exceeded expectations. The decline of the dollar makes gold denominated in the US currency more attractive to foreign buyers

Despite the gains, gold is still heading towards a limited weekly decline after it fell on Thursday to approach the $1,900 level, its lowest since August 23.

“Expectations that interest rates will remain high for a longer period are putting gold prices, which do not generate a return, under pressure,” said Yip Jun Rong, a markets expert at IG.

He added, “It does not seem that the economic conditions, which are still good in the United States, justify the need to lower interest rates soon, with the date of the reduction continuing to be postponed until the middle of next year.”

Data on Thursday showed that the US producer price index rose the most last month in more than a year, and retail sales also exceeded expectations, supported by higher gasoline prices.

This comes after the US consumer price index rose in August to its highest level in 14 months, fueling bets that the Federal Reserve may raise interest rates next week after a temporary pause.

The encouraging Chinese data supported other precious metals, with silver rising in spot trading by 1.3 percent to $22.92 per ounce.

Platinum increased 0.6% to $911.90, and palladium rose 0.1% to $1,252.56, and both are heading for weekly gains.