Gold gains as weak factory data spark stimulus concerns, dollar selloff
Published Jun 03, 2013 01:37PM ET
Stimulus measures such as the Fed's monthly USD85 billion bond-buying program weaken the greenback to spur recovery.
Gold and the dollar tend to trade inversely from one another.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were up 1.37% at USD1,412.15 a troy ounce in U.S. trading on Monday, up from a session low of USD1,388.55 and down from a high of USD1,416.35 a troy ounce.
Despite the sharp uptick, the commodity remained range-bound.
Gold futures were likely to test support USD1,384.45 a troy ounce, Friday's low, and resistance at USD1,421.25, Friday's high.
The Institute for Supply Management said earlier its manufacturing purchasing managers’ index fell to 49.0 in May from 50.7 in April.
Analysts were expecting an unchanged reading.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
Federal Reserve Chairman Ben Bernanke has said monetary authorities will pay close attention to economic data when deciding the fate of stimulus measures, and the weak PMI data sparked talk the Fed will take its time to scale back loose policies, which boost gold's appeal as a hedge to a weaker dollar.
Meanwhile in Europe, better-than-expected PMI data bolstered the euro and sent the dollar falling further.
The eurozone's manufacturing PMI improved to 48.3 from 47.8 in April indicating that the slump in the manufacturing sector is easing, according to London-based Markit Economics.
Germany’s manufacturing PMI was revised up to 49.4 in May, beating market calls for a 49.0 reading.
Elsewhere on the Comex, silver for July delivery was up 2.39% at USD22.775 a troy ounce, while copper for July delivery was up 0.97% and trading at USD3.324 a pound.
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Written By: Investing.com
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