Gold futures rebounded after a gauge of manufacturing in New York state unexpectedly declined, boosting the precious metal’s appeal as a haven.
A surprise negative reading for the New York Federal Reserve Bank’s index added to recent signs of uneven U.S. expansion and eased concerns that the economy is strong enough for policy makers to start raising interest rates. The metal fell 2.5 percent last month on speculation that rates would climb, damping gold’s appeal because the commodity generally only offers returns through price gains.
“The big story is that the first quarter was impacted by extreme weather and things would pick up in April, and we’re starting to get some April data that might not suggest that a rebound is coming,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “The more we get data like this, I think gold is still a good long play.”
Prices were little changed last quarter as investors weighed the outlook for monetary tightening in the U.S. against increased global stimulus. European Central Bank President Mario Draghi said Wednesday his 1.1-trillion-euro ($1.2 trillion) quantitative-easing program started in March will help to boost sagging inflation. The metal has historically been used as a hedge against higher consumer costs.
Gold futures for June delivery rose 0.7 percent to settle at $1,201.30 an ounce at 1:41 p.m. on the Comex in New York. On Tuesday, the price touched $1,183.50, the lowest for a most-active contract since April 1.
Prices extended gains on Wednesday after the dollar declined, fueling demand for alternative assets. The U.S. currency dropped against 10 major counterparts for a second day as declines for manufacturing strengthened speculation that the Fed will push back its timetable for raising interest rates. Total industrial production last month contracted 0.6 percent, the most since May 2009.
Silver futures for May delivery gained 0.7 percent to $16.279 an ounce, climbing for the first time in three sessions.
Platinum futures for July delivery increased 0.3 percent to $1,156.60 an ounce on the New York Mercantile Exchange. Palladium futures for June delivery added 0.6 percent to $767.10 an ounce.