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Gold Steady as Investors Assess China's Stimulus Plans

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
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Gold Steady as Investors Assess China's Stimulus Plans

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk

Gold prices held steady on Monday as investors assessed China's weekend stimulus announcement, while also focusing on US Federal Reserve officials' comments for further rate cut cues.
Spot gold was little changed at $2,657.93 per ounce by 0548 GMT. Bullion rose nearly 1% in the previous session, Reuters said.
US gold futures were flat at $2,675.00.
The potential commitment to fiscal stimulus from China suggests a healthier economy, which bodes well for gold demand but the market needs to see more concrete measures, said Tim Waterer, chief market analyst at KCM Trade.
China on Saturday said it would "significantly increase" debt to revive its sputtering economy, but left investors guessing on the overall size of the stimulus package.
Investors will watch out for comments from Fed officials this week for more hints on the upcoming rate cuts, along with US retail sales data.
"If the Fed speakers this week create some further doubt over how many rate cuts could occur between now and year-end, any resulting upside in the dollar could see gold support levels around $2,600 again being tested," Waterer said.
Data on Friday showed unchanged US producer prices last month, cementing the case for quarter-point US interest-rate cuts at upcoming Fed policy meetings.
Traders see a roughly 89% chance of the Fed cutting rates by 25 basis points at its November meeting, and an 11% chance of it leaving rates unchanged.
The zero-yielding bullion is preferred in a low-interest rate environment.
The dollar index rose 0.1%, putting pressure on greenback priced-metals. A stronger dollar makes them less attractive to other currency holders.
Spot silver fell 0.4% to $31.39 per ounce and platinum shed 1% to $974.88. Both were set to snap a two-session winning streak.
Palladium extended its decline, falling 0.9% to $1,058.98.

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China’s Deflationary Pressures Build in Sept, Consumer Inflation Cools

People arrive at the Beijing railway station in Beijing on October 10, 2024. (AFP)
People arrive at the Beijing railway station in Beijing on October 10, 2024. (AFP)
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China’s Deflationary Pressures Build in Sept, Consumer Inflation Cools

People arrive at the Beijing railway station in Beijing on October 10, 2024. (AFP)
People arrive at the Beijing railway station in Beijing on October 10, 2024. (AFP)

China's consumer inflation unexpectedly eased in September, while producer price deflation deepened, heightening pressure on Beijing to roll out more stimulus measures quickly to revive flagging demand and shaky economic activity.

Finance Minister Lan Foan told a news conference on Saturday there will be more "counter-cyclical measures" this year, but officials did not provide details on the size of fiscal stimulus being prepared, which investors hope will ease deflationary pressures in the world's second-largest economy.

The consumer price index (CPI) rose 0.4% from a year earlier last month, against a 0.6% rise in August, data from the National Bureau of Statistics (NBS) showed on Sunday, missing a 0.6% increase forecast in a Reuters poll of economists.

The producer price index (PPI) fell at the fastest pace in six months, down 2.8% year-on-year in September, versus a 1.8% decline the previous month and below an expected 2.5% decline.

Chinese authorities have stepped up stimulus efforts in recent weeks to spur demand and help meet an around 5.0% economic growth target for this year, though some analysts say the moves may only offer temporary relief for the economy and stronger measures are needed soon.

The central bank in late September announced the most aggressive monetary support measures since the COVID-19 pandemic, including numerous steps to help pull the property sector out of a severe, multi-year slump, including mortgage rate cuts.

With little new from Saturday's Ministry of Finance briefing, some analysts are now hoping that a meeting of China's parliament expected in coming weeks will unveil more specific proposals.

However, many China watchers say Beijing also needs to firmly address more deeply-rooted structural issues such as overcapacity and sluggish consumption.

Excessive domestic investment and weak demand have pushed down prices and forced companies to reduce wages or fire workers to cut costs.

CPI was unchanged month-on-month, versus a 0.4% gain in August and below an estimated 0.4% increase.

Food prices perked up 3.3% on-year in September compared with a 2.8% rise in August, while non-food prices was down 0.2%, reversing 0.2% uptick in August.

Among non-food items, the decline in energy prices deepened, and tourism prices switched to down from up with declines in airfares and hotel accommodation prices widening, said the NBS in an accompanying statement.

Core inflation, which excludes volatile food and fuel prices, stood at 0.1%, down from 0.3% in August, also hinting that deflation pressures were mounting.