Gold Supported as China’s Consumption Soars in March
Gold is starting the fresh trading week and month on a bullish note, notching up gains, buoyed by data revealing a surge in China’s consumption of the precious metal during the first three months of the year as its economy and demand bounced back after last year’s coronavirus outbreak. At the time of writing, GOLD is trading at a little above $1,773.
China is one of the biggest consumers of physical gold, followed by India. According to data released by China Gold Association late last week, gold consumption increased by 93.9% YoY in the nation as the economy emerged out of the coronavirus crisis. Meanwhile, even as India battles the deadly second wave of the pandemic, retailers offered discounts on the yellow metal in an attempt to spur consumption.
Gold prices, however, are facing some pressure from strong data releases in the US indicating that a rebound in the economy is underway. President Biden’s plans to roll out $1.9 trillion worth of stimulus helped drive up consumer consumption during the month of March.
Meanwhile, Dallas Fed President Robert Kaplan has hinted that the central bank needs to start looking at easing off on stimulus initiatives as the economy shows signs of recovery, as a failure to step in at the right moment could create possible imbalances in financial markets. On the other hand, US Treasury Secretary Janet Yellen – who is known for her dovish outlook and preference for stimulus measures, has reassured markets that Biden’s latest proposal for spending on infrastructure will not hike up inflation. She also mentioned that the government will look into easing its stimulus initiatives gradually over the next 10 years.
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