Market sentiment buoyed up as Chinese macroeconomic data surprised to the upside, temporarily overshadowing ongoing debt problems in the Eurozone.
Spot gold hit a record high above $1,589 on Thursday, while spot silver rose to $38.51 per ounce, the highest since May 31.
The yellow metal is on course for its ninth consecutive day of gains. U.S. gold hit a record at $1,590.80 an ounce. It was trading at $1,585.40, little changed from the previous close.
China’s economy expanded +9.5% y/y in 2Q11. While easing from +9.7% in the prior quarter, it exceeded market consensus of a +9.3% expansion. The upside surprise was driven by strong growth in industrial production. The set of data should send positive messages to the market and give further evidence that China should avoid hard landing. While the government should maintain appropriate tightening monetary policies in the second half, further rate hikes and RRR increases would be adopted more cautiously as inflation might have peaked at +6.3% in June.
Gold prices are likely to outpas the record highs in the short term, with the immediate target at $1,600, traders and analysts comment. Technical analysis suggested a bullish performance. Spot gold is likely to rise to $1,613 an ounce, according to Reuters market analyst Wang Tao.
Spot silver rose to $38.51 per ounce, the highest since May 31, before trading up 0.3 percent at $38.25, tracking gains in bullion and extending the 5.6 percent rise in the previous session. U.S. silver also rose 0.3 percent to $38.28.
Earlier projections for increase in demand for silver for industrial and energy needs are very much likely to materialize and drive prices up.