Gold steadied on Tuesday as equities rebounded after China's weakest economic growth in years fanned stimulus hopes, spurring investors towards risky assets. Chinese stocks surged, helping Asian equities shake off early losses to trade modestly higher. Data showed the world's No 2 economy grew 6.8 percent in the fourth quarter, the slowest since 2009, and analysts say this year's performance hinges on Beijing's support.
For all of 2015, China's growth came in at 6.9 percent, the weakest in 25 years. The numbers matched economists' estimates in a Reuters poll, underlining the challenges Beijing faces in stabilising activity while reforming its economy. "We've got a short-term easing of concerns around the market which puts pressure on gold and of course we've got a longer term trend of a stronger US dollar," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Spot gold was little changed at $1,089.96 an ounce by 0710 GMT, after a lethargic session on Monday with US markets shut for the Martin Luther King holiday. Gold touched a session high of $1,090.40 soon after China's GDP data was out, benefiting from the risk-off environment, MKS Group dealer Alex Thorndike said. "The move was brief however with fast money types hitting bids above $1,090 and quickly pushing the market back to $1,088-$1,090 where we consolidated into the afternoon," Thorndike added.
Bullion scaled a two-month high of $1,112 on January 8 amid concerns over the fate of the global economy, particularly China. US gold for February delivery was flat at $1,089.90 an ounce. Weak physical demand from top gold consumers China and India has limited gold's upside potential, analysts say, with Chinese consumer spending dented by its slowing economy.
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