Gold settles off session lows after data show weakness in U.S. manufacturing

Gold fell on Monday, pressured by a round of upbeat data on Chinese manufacturing activity, but prices finished above the session’s worst levels as weakness in the U.S. manufacturing index dulled appetite for stocks.

“Positive economic news” from the U.S. and across the world, if any, “can result in sharp corrections for gold,” Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch. “Economic news will be the key.”

Gold for February delivery GCG20, -0.24% on Comex fell $3.50, or 0.2%, to settle at $1,469.20 an ounce after tapping lows under $1,460. March silver SIH20, -0.74% lost 14 cents, or 0.8%, at $16.966 an ounce.

“A sudden rise in risk aversion among market participants on Friday allowed the gold price to gain by a good $10 to $1,465 per troy ounce in a matter of hours,” said Daniel Briesemann, analyst at Commerzbank, in a note. “Relatively good Chinese data” caused the gold prices to correct again on 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 on 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.

However, in the U.S., the Institute for Supply Management said Monday that its manufacturing index sank to 48.1% in November from 48.3% in October. Economists surveyed by MarketWatch had forecast the index to reach 49.2%.

U.S. benchmark stock indexes traded lower on Wall Street gold futures settled, providing some support for haven gold, but Treasurys sold off, pushing up yields. Higher yields can dent demand for gold, raising the opportunity cost of holding a nonyielding asset.

Briesemann said uncertainty around U.S.-China trade talks could help keep a floor under gold prices. China is insisting that U.S. tariffs be rolled back as part of any “phase one” trade deal, China’s state-run Global Times said Sunday. And Axios reported Sunday that any deal is unlikely to be agreed upon before late December, but that Trump is expected to put off tariff hikes scheduled to take effect Dec. 15 to keep negotiations alive.

Traders are also bracing for data on U.S. employment this week, with nonfarm payrolls Friday, “hence the range trade,” said Karnani, adding that he will be closely watching for any U.S. presidential impeachment related news, which “should be positive for gold and safe havens.”

In other metals trade, January platinum PLF20, +0.06% fell nearly 0.1% to $899.70 an ounce, while March palladium PAH20, +0.94% gained 0.8% to $1,824.70 an ounce.

March copper HGH20, -0.38% fell 0.4% to $2.6505 a pound.

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