News from China fueled the rise for the fourth day in a row in gold prices, while silver looked to be heading for its strongest weekly gains in two years. Figures released Wednesday by China showed that April's inflation rate was higher than expected, at 5.3%, and industrial output was lagging.
Reuters reported that spot gold added 0.6% to $1,523.80 per ounce in early morning trading in Europe, while COMEX June gold futures rose 0.5% to $1.524.00. Demand was strengthened by the prospect of rising prices and slowing growth. Spot silver was also in line for a fourth day of gains in a row after a 20% drop last week, gaining as much as 2.7% to $39.48 before falling back a bit to $39.16. COMEX silver also gained, adding 1.8% to $39.18.
A Chinese government economist was cited in the report saying that the central bank may lower interest rates instead of further raising them as the year goes on, to ward off additional economic slowing. Currently real interest rates in China are at approximately 1%, with inflation factored into the benchmark rate. This compares with a rate of -2.45% in the U.S., -1.55% in the euro zone, and a rate within the G20 that averages -0.4%.