Poor Chinese GDP data caused traders to sell metals positions on fears of a Chinese economic slowdown. Spot gold dropped $25 to $1649.20.
Spot gold was under pressure late in the session as weekend book squaring and poor Chinese data took the metal lower. Chinese GDP number disappointed the market as weaker than expected figures overnight also dented equities as well. China's first-quarter GDP grew by just 8.1 percent, the slowest rate in almost three years and well below a forecast of 8.3 percent and the 8.9-percent growth rate of the previous quarter. Thursday saw the World Bank state that the Chinese economy could be sluggish in the coming months. A slowdown for an economy that is the leading importer of industrial metals has traders on edge. While the edge is on, there remains the strong belief by many that the People's Bank of China will take the gold-supportive step of pumping liquidity into the marketplace to avoid a so-called hard landing.
A stronger U.S dollar contributed to the gold sell off. A stronger dollar usually puts pressure on gold, making dollar-priced commodities pricier for holders of other currency. U.S. consumer prices eased a bit in March, as much weaker energy costs hinted at lighter inflation pressures heading into the spring. The consumer-price index, which measures how much Americans pay for everything from cereal to automobiles, climbed a seasonally adjusted 0.3% from the previous month and 2.7% from a year ago, Core prices, which exclude volatile food and energy costs, rose 0.2% from February and 2.3% year over year. Energy prices, including gasoline, rose at a much slower clip than in previous months. Crude prices also slipped after the poor Chinese data trading below $103, higher crude prices puts a drag on any economy, especially ones that are already struggling.
Spot silver saw a similar sell off as the metal back tracked to $31.34 amid the Dow Jones Industrial average shedding 70 points. It reached a 10 day high of $32.60 before closing lower today. The gold silver ratio remains volatile as it failed to break out of its range, pushing higher to 52.75. The CME Group, which operates COMEX division, will cut margins for COMEX silver futures for the second time since February in an attempt to boost liquidity after a narrow price range tempered trading interest.
Metals have come under pressure in late afternoon trade. There are still hopes that a liquidity injection from the U.S and China amid their economies that performing as they should be. The slide today was exacerbated due to weekend book squaring. Look for dips bought as the metal moves lower. Physical demand should pick up with the soon in India, which vies with China as the world's largest consumer of the metal, due to the forthcoming Akshaya Tritya festival.