Prices boosted by some positively perceived Chinese economic data
Bullion prices ended with moderate gains on Thursday, 22 May 2014. The precious metal was boosted by some positively perceived economic data coming out of China. However, a firmer U.S. dollar index worked to pare the better early gains in gold. Traders also bet that reduced restrictions on gold imports in India will boost demand.
Gold for June delivery climbed $6.90, or 0.5%, to $1,295 an ounce on the Comex division of the New York Mercantile Exchange.
July silver also gained 18 cents, or 0.9%, to end at $19.52 an ounce.
The preliminary HSBC China manufacturing purchasing managers index (PMI) for May came in at 49.7 versus 48.1 in April and was the best reading in five months, it was reported on Thursday. This news helped to lift world stock markets and the raw commodity sector, as China is the world's largest consumer of raw commodities and is the world's second-largest economy. Still, a PMI reading below 50.0 suggests contraction. China had recently seen a string of downbeat economic reports.
Gold prices were also firmer on Thursday in part due to the Indian government relaxing rules on the importation of gold by consumers. This is likely to result in more gold purchasing from Indian consumers. India is already the world's second-largest consumer of gold.
U.S. economic data released Thursday included the weekly jobless claims report, the Chicago Fed national activity index, the U.S. flash manufacturing PMI, leading economic indicators, the Kanas City Fed manufacturing survey, and existing home sales. All in all there was some good data and some not-so-good data and it was a mixed bag for the market place, which showed a muted reaction to the data.
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Meantime, the Markit composite purchasing managers' index for the European Union fell to 53.9 in May from 54.0 in April. This report was in line with market expectations.
The market place quickly digested the minutes from the latest U.S. FOMC meeting, which were released on Wednesday afternoon. Those minutes showed Federal Reserve officials discussing how to go about raising interest rates and that caused a modest reaction by some markets, but it was short-lived. In the end most traders and investors reckoned there was not much new in the FOMC minutes and that U.S. interest rates are likely to remain low for quite some time to come.
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