Gold Rises to Three-Month High as China Woes Fuel Haven Demand

  • Inflows into exchange-traded products show demand: Commerzbank
  • Investors `hiding' from volatility and uncertainty: analyst

Gold futures climbed to the highest in almost three months after data showed further contraction in Chinese and U.S. manufacturing, boosting demand for the metal as a haven.

China’s official factory gauge signaled conditions deteriorated for a sixth month in January, while a government report Monday showed manufacturing in the U.S. shrank for a fourth consecutive month. Oil’s longest rally this year faltered, adding to demand for gold.

Bullion rebounded this year amid a selloff in global equities and rising bets that the U.S. Federal Reserve will hold off on raising interest rates further. Higher rates reduce the appeal of precious metals, which don’t pay interest or offer returns. A gauge of 14 gold producers tracked by Bloomberg Intelligence climbed as much as 3.3 percent on Monday.

“People are hiding from all the volatility and uncertainty out there,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “Any time you see any weaker number, that’s going to support gold, with the thought that the Fed is less likely to be raising rates when we see weaker data points.”

Gold futures for April advanced 1 percent to settle at $1,128 an ounce at 1:40 p.m. on the Comex in New York, after reaching $1,129.40, the highest for a most-active contract since Nov. 3.

Gold Fields Ltd. surged 10 percent in Johannesburg on Monday, leading gains in the Bloomberg Intelligence gauge. Newmont Mining Corp., the largest U.S. gold producer, climbed as much as 3.1 percent in New York.

Bullion prices have also been underpinned by increased sales at U.S. and Australian mints, Commerzbank AG said in a note to investors Monday.

  • Holdings in gold-backed exchange-traded products climbed for a 10th straight day on Friday to the highest since early November. Assets rose 0.8 metric ton to 1,516.3 tons, data compiled by Bloomberg show.
  • Silver futures gained 0.7 percent on the Comex, as palladium rose and platinum declined on the New York Mercantile Exchange.
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