The spot gold price inched higher during Asian trading hours on Wednesday supported by mixed economic data from the US and flat Chinese May manufacturing purchasing managers’ indexes (PMI).
Spot gold was last at $1,218.20-1,218.50 per ounce, up $3 from Tuesday’s close. Trading ranged at $1,215.30-1,220 so far.
On Tuesday, gold had advanced for the first time in almost two weeks as investors were cautious following mixed US data which had personal spending rising and regional PMIs slipping, said Commerzbank on Tuesday.
US Chicago PMI in May disappointed at 49.3, below the estimate of 50.8 and officially in contraction territory. CB consumer confidence over the same period was at 92.6, missing the forecast of 96.1.
CORE PCE price index month-over-month in April was in-line with expectations at 0.2 percent, while personal spending and income gained 1.0 percent and 0.4 percent respectively, besting or as expected with the estimates of 0.7 percent and 0.4 percent.
On Wednesday, China also released flattish May manufacturing PMIs which highlighted the tepid pace of economic recovery in the world’s second largest economy.
China’s official manufacturing PMI for May came in at 50.1, close to forecast of 50 and unchanged from April’s reading of 50.1. The 50-point mark separates expansion in activity from contraction.
The country’s non-manufacturing PMI for May was at 53.1, down slightly from April’s figure of 53.5.
The Caixin manufacturing PMI for May read 49.2, close to forecast of 49.3 and slightly lower from April’s number of 49.4. This was the 15th straight month where the index was below the neutral 50 value.
Chinese economic data saw a credit-fuelled bounce in the first quarter. The subsequent easing in most of April’s key data hinted of a slowdown in Beijing’s aggressive stimulus measures and led to concerns that China’s economic recovery was weaker-than-expected.
“Overall, China’s economy has not been able to sustain the recovery it had in the first quarter and is in the process of bottoming out. The government still needs to make full use of proactive fiscal policy measures accompanied by a prudent monetary policy to prevent the economy from slowing further,” said Zhong Zhengsheng, director of macroeconomic analysis at Caixin.
Gold has so far has found dip-buying support after the test to $1,200 on Monday lacked momentum, said James Moore, research analyst at FastMarkets.
“The fact investors are still seeking to enter the gold market reflects the scale of risk events facing markets in the coming months,” he said.
“Despite this, gold remains vulnerable in the short term due to elevated speculative exposure. Failure to consolidate above $1,206 would open the way to challenge $1,175.”
Investors are now focused on US economic data which could determine if the US Federal Reserve would lift interest rates in June.
Final manufacturing and ISM manufacturing PMIs from the US are due later on Wednesday with the blockbuster payrolls report expected on Friday. Friday’s US jobs report is expected to show 160,000 jobs added in May.
The data point has taken on greater importance since the Federal Open Market Committee (FOMC) April meeting minutes showed a number of policy-board members were growing more comfortable with a summer rate hike.
While some doves remain, an improving labour market coupled with signs of inflation and wage growth is leading most central bankers to at least consider a June rate hike.
Still, only 23 percent of market participants are expecting a hike next month, with 59 percent pricing-in a hike in July, according to the CME Group FedWatch.
In currencies, the US dollar index rose 0.04 percent to 95.86 so far on Wednesday.
In other commodities, the Brent crude oil spot price rose 0.16 percent $49.59 per barrel, while the Texas light sweet crude spot price decreased 0.14 percent to $48.82 recently on Wednesday.
In equities, the Shanghai Composite rose 0.36 percent to 2,927.14 so far on Wednesday.
In other precious metals, silver increased $0.02 to $16.005/16.025. Platinum was up $2 to $977/982, and palladium gained $2 to $545/551 recently on Wednesday.
On the Shanghai Futures Exchange, gold for December delivery was unchanged at 260.05 yuan per gram and December silver was flat at 3,589 yuan per kilogram.
(Additional reporting by Dalton Barker)
The post Gold supported by mixed US data, flat Chinese PMIs appeared first on The Bullion Desk.
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