Gold Falls as Steadying U.S. Factory Data Reduces Haven Demand

  • Gains in new orders and production stabilize manufacturing
  • Gold is still up 16% this year as investors seek havens

Gold on Pace for Best Monthly Gains Since 2012

Gold retreated from its biggest monthly rally since 2012 after a gauge of U.S. factory activity shrank less than economists expected, boosting equities and reducing demand for gold as a haven.

The Institute for Supply Management’s February index climbed to 49.5, the highest since September and above the median estimate in a Bloomberg survey, a report from the Tempe, Arizona-based group showed Tuesday. U.S. stocks rallied to a seven-week high.

Gold has benefited this year as turmoil across equity and credit markets and evidence of slowing global economic growth sent investors running for safe places to store cash. Assets in exchange-traded products backed by gold increased in February by the most in seven years.

“Looking at U.S. economic indicators, ISM manufacturing is still in contraction, but people were expecting the worst and it held up well.” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “People reversed some of that near-term pessimism and I think that has impacted gold negatively.”

Gold for immediate delivery fell 0.6 percent to $1,231.10 an ounce at 2:01 p.m. in New York. The metal climbed 11 percent last month, the biggest rally since January 2012. Gold futures for April delivery slid 0.3 percent to $1,230.80 an ounce on the Comex. Futures are up 16 percent this year.

Holdings in exchange-trade products backed by gold expanded 12 percent last month, data compiled by Bloomberg show. Assets were 1,702 metric tons as of Monday, the highest since September 2014.

  • Silver futures for May delivery slid 1.1 percent to $14.756 an ounce on the Comex.
  • Palladium and platinum rose on the New York Mercantile Exchange. 
  • The odds of the Federal Reserve raising interest rates in December climbed to 65 percent on Tuesday from 54 percent a day earlier.
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