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Gold prices show a moderately positive trend after declining the previous day, as investors weighed news about illegal transactions with the metal to obtain loans in the PRC and signs that U.S. inflation is accelerating.
During the investigation conducted by the Chinese authorities became aware of the loans totaling 94.4 billion yuan (15.2 billion dollars), which are associated with the possible misuse of gold as collateral for loans since 2012. According to the report of the National Audit Office of China, check zolotoobrabatyvayuschih 25 companies revealed a large amount of illegally obtained loans secured by gold. Recipients of loans used the funds to profit from the spreads on interest rates and foreign exchange market. However, management did not specify what was the structure of these loans or making them illegal.
For some traders investigation in respect of loans with gold as collateral raises doubts about the future of such loans in China, said Edward Meir, a senior strategist at INTL FCStone.
Market participants fear that "the authorities are tightening the terms of this type of lending, which in turn could weaken import demand," - he added.
However, it is too early to assess the impact of the results of this investigation on the world gold market, as the details are still unclear, warned Jim Wyckoff, senior analyst at Kitco.
"We do not know much about this situation - he said. - The situation is evolving, but $ 15 billion - this is not a small amount, "- said Woolfolk.
However, gold prices have recovered somewhat from the sharp decline after data showed that the price index for personal consumption expenditures, a key indicator of inflation, rose by 1.8% compared with the same period last year. This is the strongest growth in 19 months.
Gold is considered by some investors, holds its value better rates or Treasury bonds, and they tend to buy the metal as a hedge against inflation.
The cost of the August gold futures on the COMEX today rose to $ 1323.1 per ounce.
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