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Gold Edges Up on Weaker Dollar, Capped by Chinese Data

January 14, 2019 at 17:25 by Andrew Moran

Gold prices edged up to kick off the trading week, buoyed by a tumbling US dollar. But the gains, which have been modest, were capped by disappointing Chinese data that is leaving investors skeptical that the Asian powerhouse can rejuvenate the economy and boost demand for the metals market. The gold industry also generated buzz on news that Newmont Mining acquired Goldcorp.

February gold futures rose $1.30, or 0.1%, to $1,290.80 per ounce at 15:36 GMT on Monday. The yellow metal lodged a 0.3% weekly gain last week, bringing its year-to-date advance to 0.5%.

Silver, the sister commodity to gold, is flat to start a fresh week of trading. March silver futures were unchanged at $15.65 an ounce. The white metal posted a 0.3% loss last week, climbing 0.6% YTD.

Gold is slightly benefiting from a lower US dollar as the greenback fell 0.16% to 95.57 after recording a weekly drop of 0.6%. A lower buck is good for commodities pegged in dollars because it makes it cheaper for foreign investors to purchase.

Volatility in global financial markets were somewhat of a boon for precious metals on Monday. One of the chief causes for the sea of red was China. New data found that there has been a steep decline in imports and exports last month. This fueled additional concerns of a greater slowdown for the world’s second-largest economy, which could create a ripple effect throughout global markets.

There is some optimism that the Chinese economy could reverse the sluggish performance if Washington and Beijing reach a new trade agreement. The two nations are in the middle of a 90-day trade truce, and negotiators say they are inching closer to a trade deal.

Meanwhile, gold investors were excited about the news that Newmont Mining acquired Goldcorp in a merger valued at $10 billion with synergy savings of more than $100 million. Under the deal, Newmont will buy each Goldcorp share for 0.328 of a Newmont share, representing a 17% premium. Once the deal has been completed, it will be the largest gold mining company in the world. Goldcorp shares surged as much as 10% on the news, while the Newmont stock plummeted 9%.

In other metal markets, March copper futures shed $0.04, or 1.48%, to $2.62 per pound. March platinum futures tumbled $12.90, or 1.58%, to $805.10 an ounce. March palladium futures tacked on $4.00, or 0.31%, to $1,282.30 per ounce.

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