Gold (GLD) and Silver (SLV) Climb Higher After China Data

On Tuesday, gold (NYSEARCA:GLD) futures for February delivery jumped $24.80 to settle at $1,655.60 per ounce, while silver (NYSEARCA:SLV) futures surged 61 cents to settle at $30.14.

China (NYSE:FXI) reported GDP growth of 8.9 percent in the last quarter of 2011, which is the slowest growth increase in more than two years.  However, analysts were only expecting growth of 8.7 percent.  China’s slowing economy is giving investors reason that the world’s second largest economy will provide more stimulus to fuel GDP.

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The WSJ explains, “The last time the Chinese economy slowed significantly was in the last quarter of 2008 when the world was tumbling into recession. Over the next two years, China responded with a four trillion yuan ($586 billion) stimulus plan that was financed by a surge in lending by state-owned banks. The response helped boost China’s growth to 9.2% in 2009 despite the global downturn.”  For the entire year of 2011, China grew at 9.2 percent, compared to 10.4 percent in 2010.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) increased 1 percent, while the iShares Silver Trust (NYSEARCA:SLV) gained 1.7 percent.  Gold miners (NYSEARCA:GDX) such as Newmont Mining (NYSE:NEM) fell 3.3 percent, while Yamana Gold (NYSE:AUY) only declined by .13 percent.  Shares of Barrick Gold (NYSE:ABX) fell by almost 1 percent as the miner received a downgrade from Buy to Hold at Canaccord.  Silver miners (NYSEARCA:SIL) such as Endeavour Silver (NYSE:EXK) and First Majestic (NYSE:AG) declined .78 percent and .86 percent, respectively.

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The Dow Jones news reports that net central bank gold purchases jumped to about 430 metric tons in 2011, which represents a more than five-fold increase from the previous year.  It is the highest level of central bank purchases recorded since 1964, according to the latest GFMS Annual Gold Survey.

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To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com