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China’s Inflation Makes Precious Metals Stronger, Crude Weaker

May 11, 2011 at 4:37 by Vladimir Vyun

Gold and silver rose today, while crude oil erased gains, after the government report showed that China’s inflation beat forecasts. China’s consumer prices grew 5.3 percent in April, following the 5.4 percent increase in March. Analysts expected increase by 5.2 percent. The inflation was well above the government target of 4 percent.

The accelerating inflation increased demand for precious metals as an inflation hedged. On the other hand, overheating China’s economy will likely prompt more tightening measures from the Chinese government. This possibility weakened crude.

Futures on silver advanced as much as 1.9 percent to $39.20 per ounce. Contract for immediate delivery of gold rose 0.5 percent to $1,523.82 per ounce before trading at $1,522.95, posting the fourth day of gains after its lost 4.4 percent last week. Crude oil fell $0.26 to $103.62 per barrel, after rising earlier to $104.60.

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