Gold up as weak Chinese data boosts stimulus hopes

NEW YORK (Reuters) - Gold rose on Friday, and is on track to post a gain for the week, as disappointing Chinese trade and new bank-lending data suggested policymakers there may need urgent action to boost sputtering growth in the world's second-largest economy.

The precious metal also received a boost from simmering inflation worries as corn futures rose to an all-time high after the U.S. government slashed the size of the crop in the world's top grain exporter.

Corn futures later turned lower on ideas the record high prices will hurt demand.

Bullion broke ranks with declines in U.S. equities after Chinese data showed July exports rose just 1 percent from a year ago and that new loans were at a 10-month low, adding to Thursday's data showing factory output rising at its lowest pace in three years.

"Gold is up mainly because of the weak manufacturing numbers in China, suggesting that there is a pretty strong indication we are going to see more quantitative easing there," said Jeffrey Sica, chief investment officer at SICA Wealth Management, which has over $1 billion in assets.

Spot gold rose 0.3 percent to $1,621.66 an ounce by 11:36 a.m. EDT (1536 GMT), rebounding from a low from earlier in the session at $1,605.20.

The metal was on track for a weekly gain of 1 percent largely on hopes for stimulus measures by China after Thursday's lackluster factory data.

U.S. gold for December was up $4.40 at $1,624.60 an ounce. Trading volume was on track to finish below its 30-day average but still set for its highest level for the week, preliminary Reuters data showed.

The U.S. Department of Agriculture on Friday slashed its estimate of corn production in the United States this year as the worst drought in 56 years devastated the crop, pushing prices to a record high.

Sica said, however, rising food commodity prices could hurt rather than help gold prices because they prompted the Federal Reserve to be more vigilant on keeping inflation under control.

The next major event for the gold market is likely to be the annual meeting of economists and central bankers in Jackson Hole, Wyoming.

TO EASE OR NOT TO EASE

Uncertainty over whether the U.S. Federal Reserve and European Central Bank will take further steps to boost their economies has so far deterred a stronger move in gold prices, and bullion remains below last September's record high at around $1,920 an ounce.

Markets also have been pinning hopes on the possibility the ECB will start buying sovereign bonds to lower borrowing costs in debt-stricken countries such as Spain and Italy.

Among other precious metals, silver inched up 1 penny at $28.11 an ounce, while platinum fell 0.6 percent to $1,396.74 and palladium lost 0.7 percent to $576.72.

The unusual spread between the much-more scarce platinum and gold now stood at an all-time high at nearly $230 an ounce.

(Additional reporting by Siliva Antonioli in London; Editing by Bob Burgdorfer)

Source: http://news.yahoo.com/gold-weak-chinese-data-boosts-stimulus-hopes-161943444--finance.html

rockies ashley judd second degree murders bobby petrino brian dunn vin scully petrino fired