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Gold Prices Touch $1750 as US Retail Sales Surge, China Vows to Stall Inflation

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Published : April 15th, 2021
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GOLD PRICES slipped $3 per ounce from a new 1-week high above $1750 at the start of US trade Thursday after new data showed a record jump in retail sales coinciding with last month's $1,400 Covid stimulus checks sent to most US adults.
"Retail sales explode [for] March as consumers use stimulus checks to spend heavily," says CNBC after the new data showed a record 24.4% year-on-year rise in shopping and food services purchases.
Gold prices in China had earlier fixed in Shanghai at a premium over London quotes of more than $11.40 per ounce, the highest incentive for new imports to gold's No.1 consumer nation in 5 weeks.
"China still needs an expansionary economic policy," says former PBOC policy maker Yu Yongding, writing at Project Syndicate.
But the People's Bank of China – which last night released a working paper suggesting the world's most populous nation end its one-child policy to try reversing its fast-ageing demographics – meantime "disappointed" investors, Bloomberg says, by failing to inject more liquidity into the banking system with $23 billion in short-term loans.
"[China must] strengthen market regulation of raw materials to ease the cost pressure of companies," said Premier Li Keqiang in a speech made last week and reported on Sunday, pointing to the steep jump in industrial prices thanks to the world's No.2 economy re-opening from last year's Covid Crisis.
"It is understandable that [Beijing] would want to try and modify input costs," says analyst Rhona O'Connell at brokerage StoneX.
"The impact on gold of this policy is negligible – unless it fails...[because] fears of rising inflation would certainly underpin domestic gold physical demand...already picking up smartly after over a year in the wilderness.
"[Also] if China is exporting more expensive goods as a result of higher costs...that will feed through into inflationary forces of its trade partners."
24hGold - Gold Prices Touch $1...
Western investment funds backed by gold saw their first outflows in almost a week on Wednesday, with the giant SPDR Gold Trust (NYSEArca: GLD) shrinking 0.3% to a new 12-month low in size.
Competitor gold ETF the iShares product (NYSEArca: IAU) meantime shrank 0.2% to its smallest since mid-August.
"Although gold has lost much of its appeal for investors in 2021," Reuters quotes Avtar Sandu at Singapore brokerage Phillip Futures, "and [while] the technical [chart] picture has deteriorated in favour of bears rather than bulls, deep corrections are still viewed as buying opportunities."
The $1.9 trillion Covid relief bill proposed by new president Biden and approved by Congress and the Senate at the start of March takes Washington's total stimulus and support payments over the last 12 months to "about $5 trillion," says CNBC, "fueled by red ink that fiscal authorities say is necessary to keep the economy running."
But central bank the US Federal Reserve will not start to raise its key interest rate from zero until after it has started to "taper" its quantitative easing purchases of US government and other debt assets, Fed chair Jerome Powell said in a speech Wednesday.
As for crypto-currencies, "They're really vehicles for speculation...[and] they're not really being actively used as payments," Powell replied to a question about Bitcoin from the Economic Club of New York.
"My customers are fully focused on Coinbase right now," MarketWatch quotes Anthony Denier, CEO of retail-investor stock platform WeBull, after the crypto-trading site Coinbase floated on New York's Nasdaq exchange at a valuation of more than $80 billion.
Founded in 2012 and with perhaps $223bn of digital assets on its platform, Coinbase was valued at just under $6bn last September.
Bitcoin prices today retreated 3.3% from yesterday's fresh all-time high above $64,000 but held nearly 115% higher for 2021 to date.
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The London Gold Market Report is the daily market review from BullionVault, the world's largest physical gold and silver market for private investors. A full member of professional trade body the London Bullion Market Association, BullionVault publishes the LGMR every day that the market is open, bringing you insider comment and analysis from the very center of the world's $240 billion-a-day physical gold trade, and putting the latest gold price action into its wider financial and economic context. Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
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