Tags: Gold Rises in Spite of Chinese Rate Hike

Gold Rises in Spite of Chinese Rate Hike

Tuesday, 28 Dec 2010 08:33 AM

Gold prices rose despite a lending rate hike in China, an even that many traders believe will lead to a gold sell-off at the end of the year to lock in profits.

Gold for February delivery rose $2.40 to settle at $1,382.90 an ounce Monday. Industrial metals rose as well on the belief that economic growth could boost demand for platinum, palladium or other materials used in manufacturing.

On Saturday, the Chinese government announced that the benchmark one-year lending rate will climb 25 basis points while the one-year deposit rate will go up the same amount. It is part of China's ongoing effort to tackle inflation.

In many instances, that would send gold prices lower, but not on Monday.

Traders seemed eager to snap up gold even near its high for the year. The demand might have come from another recent announcement from the Chinese government: that average consumers could buy up and accumulate gold bullion in special accounts.

More Chinese gold buyers signals greater demand in years to come, which could have encouraged futures traders to buy contracts now, said George Gero, senior vice president of RBC Wealth Management.

"It was one (announcement) canceling out the other, basically," he said.
Copper for March delivery rose 2.15 cents to settle at $4.28 a pound while silver lost 7.3 cents to settle at $29.255 an ounce.

December palladium gained $9 to settle at $767.20 an ounce and December platinum gained $12.40 to close at $1,735.50 an ounce.

Oil prices held above $91 per barrel in light trading as an unexpectedly large drop in U.S. supplies pushed crude prices above that threshold last week.

Any chance that prices would retreat again disappeared over the weekend after OPEC ministers signaled that oil production would not be bumped up.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of global crude production, influences oil prices through production quotas. While higher prices mean stronger revenue, OPEC is also aware that an overheated oil market would stunt economic growth and eventually cut energy demand.

Benchmark oil for January delivery fell 51 cents to settle at $91 a barrel on the New York Mercantile Exchange.

In other Nymex trading in January contracts, heating oil dipped 2.42 cents to settle at $2.5166 a gallon, gasoline fell 2.17 cents to $2.4209 a gallon and natural gas gained 2.9 cents to $4.112 per 1,000 cubic feet.

Grains and soybeans were mixed. March wheat fell 2.75 cents to settle at $7.8025 a bushel. March corn rose 1.25 cents to $5.1525 a bushel and March soybeans gained 24.5 cents to $13.845 a bushel.

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Gold prices rose despite a lending rate hike in China, an even that many traders believe will lead to a gold sell-off at the end of the year to lock in profits. Gold for February delivery rose $2.40 to settle at $1,382.90 an ounce Monday. Industrial metals rose as well on...
Gold Rises in Spite of Chinese Rate Hike
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2010-33-28
Tuesday, 28 Dec 2010 08:33 AM
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