Gold fell Monday, pressured by a round of upbeat data on Chinese manufacturing activity, but prices finished above the session lows as weakness in the US manufacturing index dulled appetite for stocks.
“Positive economic news” from the US and across the world, if any, “can result in sharp corrections for gold,” chief market analyst at Insignia Consultants said. “Economic news will be the Key.”
Gold for February delivery GCG20, -0.18% on COMEX fell $3.50, or 0.2%, to settle at 1,469.20 oz after tapping lows under 1,460.
March silver SIH20, -0.04% lost 14c, or 0.8%, at 16.966 oz.
“A sudden rise in risk aversion among market participants Friday allowed the gold price to gain by a good 10 to 1,465 oz in a matter of hours,” said an analyst at Commerzbank, in a note. Relatively good Chinese data caused the gold prices to correct again Monday, he added.
The Caixin manufacturing purchasing managers index rose to 51.8 in November from 51.7 in October, said Caixin Media Co. and research firm Markit Monday with the reading still above the 50 level that separates expansion from contraction. Earlier, China’s official manufacturing PMI reading moved back into expansion activity, rising to 50.2 in November from 49.3, according to the country’s National Bureau of Statistics, marking the first reading above 50 for the index since April.
In the US: the Institute for Supply Management said Monday that its manufacturing index sank to 48.1% in November from 48.3% in October. Economists surveyed had forecast the index to reach 49.2%.
U benchmark stock indexes traded lower on Wall Street gold futures settled, providing some support for haven gold, but Treasuries sold off, pushing up yields. Higher yields can dent demand for gold, raising the opportunity cost of holding a non yielding asset.
The uncertainty around US-China trade talks could help keep a floor under gold prices.
China is insisting that US tariffs be rolled back as part of any “Phase 1” trade deal, China’s state-run Global Times said Sunday.
Traders are bracing for data on US employment this week, with NFPs (nonfarm payrolls) Friday, hence the range trade.