Gold benefits as Chinese data dents equities’ appeal

Bengaluru — Gold rose on Tuesday as a lacklustre Chinese manufacturing activity data pushed Asian shares down, rekindling concerns about the health of the global economy.

Meanwhile, investors braced for a raft of euro-zone data and the US Federal Reserve’s two-day policy meeting, which begins later in the day.

Spot gold was up 0.2% at $1,282.08 per ounce at 3am GMT. US gold futures were up 0.2% at $1,283.90 an ounce.

“There is a broad bearish sentiment across Asia market opening this morning as a very disappointing China manufacturing PMI triggered a sell-off in currencies and emerging markets and equity markets,” said Margaret Yang, an analyst with CMC Markets in Singapore.

Reading on the official purchasing managers’ index (PMI) in for manufacturing unexpectedly fell to 50.1 in April from March’s reading of 50.5 stoking concerns about the economic state of China and pushing Asian equities lower.

Gold is generally used by investors as a safe haven investment against economic and political concerns.

The metal has, however, come under pressure as equity markets have hit record highs and most economic data from far and wide have pacified anxieties about the pace of global growth.

Gold is yet to overcome the bearish factors, and any rallies in the metal might will be short-lived, INTL FCStone analyst Edward Meir said in a note.

“We do not recommend establishing length at current levels on gold, given the lack of upside drivers. Although the dollar is not moving higher on the back of strong macro readings, it is not coming down either; neither are the US long-term rates,” Meir said.

The metal had retreated from a more than one-week high on Monday after Wall Street stocks were propelled to a record high by data showing US consumer spending increased by the most in more than nine years in March.

The technical trend has turned more bearish for gold, CMC Markets’ Yang said.

Investors await a raft of economic data from the euro zone and will also focus on the commencement of the Federal open market committee meeting that will determine the future trajectory of interest rates in the US.

The US central bank is widely expected to hold interest rates steady as policymakers balance recent stronger-than-expected US economic growth against sluggish inflation.

Elsewhere, silver fell 0.1% to $14.89 per ounce, while platinum slipped 0.1% to $893.50.

Palladium was up 0.2% at $1,372.69, having fallen by over 7% to bottom at $1,361.50 in the previous session. 

Reuters