Gold prices were up after weak economic data from China raised fears of stagnant growth in the world’s second largest economy and boosted gold's safe haven appeal. Chinese data since the beginning of the month has been on the lackluster side, missing high expectations as Chinese official’s projected much higher growth rate after its recovery. Officials had great expectations after the economy had turned around. Gold is trading at 1392.75 this morning remaining on a positive note as the US dollar eased to trade at 83.75 after topping 84.40 range on Thursday. The performance of China’s manufacturing sector, measured by HSBC’s purchasing managers index, was shown to be worse than expected at 49.6 rather than forecasts of 50.4. China’s factory activity shrank for the first time in seven months in May as new orders fell, a preliminary survey of purchasing managers showed, adding to concerns that a recovery in the world’s second-largest economy is sputtering.
The flash HSBC Purchasing Managers’ Index for May fell to 49.6, slipping under the 50-point level demarcating expansion from contraction for the first since October. The final HSBC PMI stood at 50.4 in April.
Gold rose sharply towards $1,400 per ounce, as investors sought its safe-haven status after the dollar and equity markets were hit by a slew of weak manufacturing data that indicated stagnant global economic growth.
Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 1,018.57 tons, as on May 23. ETF investors remain sidelined, and without their support it will be difficult for gold to hold on to the gains. Earlier in the week gold tumbled to test the 1321 resistance level and was unable to break through giving investors some support as they pushed gold to trade over 1400.
Silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,022.95 tons, as on May 22. Silver is trading at 22.513 and remains in the green this morning as investor take advantage of low prices and the weaker US Doller to grab up the commodity. The US dollar slumped and the yen soared on Thursday, as expectations that the Federal Reserve could soon reduce its bond purchases sparked cascading sell-offs in Japanese markets, resulting in a fierce short squeeze in the yen.
The US dollar index, a gauge of the greenback’s movement against six other major currencies, dropped to 83.723 from 84.251.
Copper futures fell the most in 3-weeks on COMEX, after manufacturing shrank for the first time in 7-months in China, the world’s biggest user of the metal. Copper futures for July delivery closed down by 2.3% at $3.304 on the COMEX division of the NYMEX. Copper prices were down after weak Chinese manufacturing activity adding to fears that recovery in the top metals consumer was weakening which could hurt demand for industrial metals. Manufacturing activity in the United States grew at its slowest pace since October, which further put pressure on prices. Base Metals are expected to move in a range due to continued supply concerns from mines which can cape the prices from falling further.
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