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Gold prices down in Asia on weak China trade data, PBOC eyed


on – Gold prices eased on Monday in Asia after weekend data on China's trade disappointed and investors kept a close eye out on the central bank's next move.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange eased 0.28% to $1.091.00 a troy ounce.

Also on the Comex, for September delivery slumped 0.61% to $14.730 a troy ounc.

Elsewhere in metals trading, for September delivery dropped 0.10% to $2.322 a pound.

Last week, copper prices dropped 2.3 cents, or 1.31%, the sixth consecutive weekly loss, amid growing concerns over the health of China's economy.

Government data released on Sunday showed that Chinese inflation for July rose 1.6%, above expectations for 1.5% and up from 1.4% in June.

The producer price index fell by a more-than-expected 5.4% last month, underling concerns over the health of the world's second largest economy.

On Saturday, data showed that the country’s trade surplus narrowed to $43.0 billion last month from $46.5 billion in June, compared to estimates for a surplus of $53.3 billion.

Chinese exports slumped 8.3% from a year earlier, worse than forecasts for a decline of 1.0%, while imports dropped 8.1%, disappointing expectations for a drop of 8.0%.

A slowdown in domestic demand indicated a recovery in the broader economy remains fragile and may need further government stimulus.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

The mixed data is sure to raise questions about the next step for the People's Bank of China should inflationary pressure be stirring. But it's the threat of capital outflows, with the Federal Reserve looming in the background, which complicates the government's options and makes the central bank's fight to hold the line on policy the more difficult.

Last week, reversed losses to end Friday's session mildly higher as traders continued to mull the timing of a Federal Reserve rate hike following the release of solid U.S. nonfarm payrolls data.

The Labor Department reported that the U.S. economy added 215,000 jobs last month, slightly lower than forecasts for an increase of 223,000, but still consistent with strong employment growth.

The unemployment rate remained unchanged at a seven-year low of 5.3%, in line with expectations.

Hourly earnings, a component of the jobs report that the Federal Reserve has said must rise, ticked up 0.2%, also matching forecasts after stalling in the previous month.

The data did little to alter expectations for a September rate increase by the Federal Reserve, but it tempered speculation for multiple rate hikes before the end of the year.

Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Federal Reserve will raise interest rates in September for the first time since 2006.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

In the week ahead, investors will be looking to Thursday’s U.S. retail sales data for a further indication on the durability of the economic recovery.

Meanwhile, copper traders are looking ahead to a raft of Chinese economic data in the coming week, including reports on industrial production, fixed asset investment and retail sales.

On Monday, Federal Reserve Governor Stanley Fischer and Atlanta Fed President Dennis Lockhart are to speak; their comments will be closely watched.

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