Investing.com - Gold prices inched up on Friday in Asia with Chinese trade data providing a mixed picture on global demand prospects and potential higher inflation.
Gold futures for February delivery on the Comex division of the New York Mercantile Exchange rose 0.41%, to $1,327.90 a troy ounce.
China reported trade data for December with exports up 10.9%, compared to a gain of 9.1% seen, imports posted a 4.5% rise, compared to a 13.0% increase expected and the trade balance came in at $54.69 billion surplus, compared to surplus of $37 billion seen.
Gold prices rose to nearly four-month highs as the dollar came under pressure after the euro surged on hawkish European Central Bank meeting minutes suggesting monetary policy tightening may soon follow.
The European Central Bank could consider a gradual shift in guidance from early 2018, the minutes of the ECB December meeting showed, as policymakers saw "some comfort" in wage dynamics despite ongoing concerns over subdued inflation.
The hawkish tone of the minutes fuelled a surge in the euro, pressuring the dollar toward four-month lows, while weaker-than-forecast wholesale inflation for December deepened the dollar’s retreat supporting an uptick in gold prices.
Dollar-denominated assets such as gold are sensitive to moves in the dollar – A dip in the dollar makes gold cheaper for holders of foreign currency and thus, raises demand.
The Labor Department said Thursday its producer price index for final demand fell 0.1% last month after rising 0.2% in November. In the 12 months through December, the PPI rose 2.6, missing expectation for a 3% rise.
The softer wholesale inflation data renewed inflation jitters, easing investor optimism for a more aggressive Federal Reserve stance on monetary policy as investors awaited a consumer inflation report due Friday.
RBC said the softer PPI data signalled “downside risk” to the consumer prices index (CPI) data slated for Friday, noting that the finished consumer goods component fell 0.4% after an impressive 1.7% gain in November.