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Gold gains in Asia on Fed rate views, China industrial data ignored

CommoditiesSep 12, 2016 10:25PM ET
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© Reuters. Gold gains in Asia - Gold prices gained in early Asia on Tuesday with views on chances for a U.S. rate hike next week squarely in focus and data upbeat data from China on industrial production shrugged off in the case of copper.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery rose 0.74% to $1,335.45 a troy ounce. Elsewhere on the Comex, silver futures for December delivery gained 1.63% to $19.310 a troy ounce. Copper futures for December delivery fell 0.14% to $2.104 a pound ahead of closely-watched data sets from China, the world's top copper importer.

China reported fixed asset investment for August rose 8.1%, better than the 8.0% year-on-year gain seen, and industrial production gained 6.3%, also beating an expected 6.1% year-on-year rise, and retail sales increased 10.6%, ahead of the 10.3% boost seen.

Overnight, gold prices slipped as views on the prospecty for a hike in U.S. interest rates took center stage.

On Monday Federal Reserve Board Governor Lael Brainard argued against prematurely removing monetary policy accommodation in the United States, remarks that are likely to significantly dampen expectations for a rate hike next week stoked on Friday by Boston Fed President Eric Rosengren who said that low interest rates are increasing the chance of overheating the U.S. economy.

But Brainard's remarks may draw the most near-term attention as the Fed enters a communication blackout period ahead of the FOMC's next meeting on Sept. 20-21 as as a key dove who has in the past been able to convince Fed Chair Janet Yellen to hold off on raising rates. The Fed Rate Monitor Tool shows a 15% possibility of a rate hike in September at the meeting, down from above 20% earlier on Monday.

Still, earlier on Monday Atlanta Federal Reserve Bank President Dennis Lockhart said Monday the economic data of late justifies a "lively" conversation about whether to raise rates at this meeting.

"Notwithstanding a few recent weak monthly reports -- from the Institute for Supply Management, for example -- I am satisfied at this point that conditions warrant that serious discussion," Lockhart said in a speech prepared for the National Association for Business Economics.

"I believe the economy is sustaining sufficient momentum to substantially achieve the committee's monetary policy objectives in an acceptable medium-term time horizon," continued Lockhart, who doesn't vote on the committee until 2018, but is largely seen as a centrist on the committee.

Gold gains in Asia on Fed rate views, China industrial data ignored

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