Gold futures gained for the second time in three sessions on expectations that China will announce more stimulus measures to boost economic growth, increasing demand for the precious metal as a store of value.
The HSBC Non-Manufacturing Purchasing Managers’ Index for China fell to 51.1 last month from 54.3 in March. A reading above 50 indicates expansion. Easing growth this year may be a “blessing in disguise” because monetary policy might remain accommodative, Citigroup Inc. said. Gold climbed on demand for a haven after Syria blamed Israel for an aerial strike near Damascus, increasing the risk of a wider regional conflict.
“People expect more stimulus measures out of China,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Also, any political tension is good for gold.”
Gold futures for June delivery advanced 0.3 percent to settle at $1,468 an ounce at 1:43 p.m. on Comex in New York. The price climbed 0.7 percent last week as the Federal Reserve raised the prospect of increasing monthly debt purchases, and the European Central Bank announcing a cut in borrowing costs to a record.
Money managers increased their net-long position on Comex gold by 19 percent to 54,762 futures and options as of April 30, U.S. Commodity Futures Trading Commission data showed on May 3.
Gold has slumped 12 percent this year after plunging into a bear market in April as some investors lost faith in the metal as a store of value. Holdings in exchange-traded products backed by the metal have tumbled 14 percent this year, according to data compiled by Bloomberg.
“We need to see ETF redemptions slow down in order for the next leg higher,” said Xiang Nan, an analyst at Citics Futures Co., a unit of China’s biggest listed brokerage.
Warren Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., said he wouldn’t buy gold after the slump. Paul Singer’s Elliott Management Corp., John Paulson’s Paulson & Co. and Threadneedle Investments are sticking with bullish bets on the metal.
Silver futures slipped 0.2 percent to $23.955 an ounce on the Comex. The price has dropped 21 percent this year.
On the New York Mercantile Exchange, platinum futures for July delivery gained 0.4 percent to $1,507.70 an ounce, the highest settlement since April 11.
Palladium futures for June delivery rose 0.5 percent to $697.10 an ounce.