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

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.

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