Metals Price Watch: Gold Climbs as China Calms Credit Worries

on Jun 25, 2013
Listen, Tuesday, June 25: Comments from China’s central bank helped calm worries about a credit crunch developing in the world’s second biggest consumer of gold and the gold price climbed today on the London Metal Exchange. Silver, platinum and palladium all followed suit.

The copper price also benefited from the Chinese central bank’s comments, rebounding from a nearly three-year intraday low earlier today.
**Gold and silver**
The gold price climbed to $1,283.45 an ounce as of 13:32 GMT from $1,273.46 earlier in the day after China dispelled fears that a credit crunch would crimp growth in the country. China’s central bank said on Tuesday it would guide rates to reasonable levels and in that way provided support for the metal and other commodities and equities that had been hit earlier. Still, gold continued to underperform compared with other precious metals, oil and copper.

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“Bullion showed little reaction to firmer equities and other commodities, including platinum group metals and silver, after the People’s Bank of China tried to once more calm the market on liquidity concerns,” VTB Capital analyst Andrey Kryuchenkov said, as quoted by Reuters.

Gold continues to suffer from Fed comments about scaling back gold-friendly debt purchases. Currently, the metal is on track for its biggest quarterly decline in more than 30 years.
A number of banks, including Credit Suisse, HSBC , Morgan Stanley, Goldman Sachs and Deutsche Bank, have cut their gold price forecasts for 2013 after the recent slide. Credit Suisse now sees the price at $1,400 an ounce, compared with a previous target of $1,580 an ounce, HSBC has trimmed its target to $1,396 an ounce from $1,542, and Morgan Stanley has reduced its 2013 forecast to $1,313 from $1,409.

!m[Copper Rebounds from Three-Year Low](/uploads/story/3391/thumbs/pic_1_inline.jpeg)
As of 14:05 GMT the silver price was at $19.67 an ounce, the platinum price was 1.5 percent higher at $1,348.49 an ounce and the palladium price was up 1.8 percent at $671 an ounce.
**Base metals**
Copper for delivery in three months rose 1.7 percent to $6,755.50 a metric ton on the London Stock Exchange, after having hit an intraday-low of $6,602, its lowest since July 2010. The increase was mainly due to the positive news coming from China, the world’s biggest consumer of the metal which accounts for about 40 percent of the global demand.

The copper price has suffered recently, as the timeframe for possible reduction of US monetary stimulus, the dollar’s strength and the resumption of operations at the world’s second-largest copper mine, Grasberg in Indonesia, have all weighed on its performance. Taking into account these factors, Credit Suisse and Deutsche Bank today cut their average copper price forecasts for 2013. Credit Suisse reduced its price target to $7,240 a ton from the earlier forecast of $7,482 and Deutsche Bank lowered its projection by four percent to $7,547 a ton.
The nickel price was a big gainer today, rising 1.48 percent to $13,832 a metric ton, having earlier hit $13,525 a tonne, its lowest point since May 2009.
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