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Gold gains as China's manufacturing data add to case for haven

Feb 01 2016 11:12
Ranjeetha Pakiam

Singapore - Gold climbed after data showed a further contraction in China’s manufacturing, adding to the case for haven assets as investors boost holdings.

Bullion for immediate delivery rose as much as 0.5% to $1 123.88 an ounce and traded at $1 122.88 at 3:44pm in Singapore, according to Bloomberg generic pricing.  On Friday, prices capped a 5.4% monthly advance, with the metal holding gains even after the Bank of Japan adopted negative interest rates, boosting the dollar.

Gold has rallied this year as a global sell-off in equities spurred by concerns over the slowdown in China stoked demand. China’s official factory gauge signalled conditions deteriorated for a sixth month in January, missing economists’ expectations, while a separate measure from Caixin Media and Markit Economics also showed a shrinkage.

“The fact that it’s lower than expectations that might just give gold a bit of a safe-haven” status, David Lennox, an analyst at Fat Prophets, said by phone from Sydney, referring to China’s manufacturing PMI.

* Holdings in gold-backed exchange-traded products climbed for a 10th straight day as of Friday to the highest since early November. Assets rose 0.8 metric ton to 1 516.3 tons, data compiled by Bloomberg show.

* “Gold closed out an impressive January, up 5%, confirming its safe-haven status in what was a month to forget for equity markets,” Jordan Eliseo, chief economist at trader Australian Bullion in Sydney, said by e-mail. “It also showed impressive strength on Friday, shrugging off the huge move in dollar-yen.”

* Spot silver gained 0.6% on Monday, while platinum and palladium were little changed.

* “This week, market attention will again be central-bank focused, with Draghi and Kuroda due to speak, as well as a raft of economic data out of the US, which will culminate in another much-awaited payroll report,” Eliseo said.

* BOJ Governor Haruhiko Kuroda and European Central Bank President Mario Draghi have speeches scheduled, while US payrolls and unemployment rate data for January are due for release on February 5.

commodities  |  gold  |  markets
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