Selloff in global stock markets and downbeat economic data boost appeal
Bullion prices settled at their highest level in more than two weeks on Tuesday, 01 September 2015 as a selloff in global stock markets and downbeat economic data helped boost the metal's investment appeal. Prices for the yellow metal had posted declines in five of the last six sessions, as investors weighed prospects for a U.S. rate increase and on fears about China's economic growth linger.
Gold futures for December delivery rose $7.30, or 0.6%, to settle at $1,139.80 an ounce on Comex. In August, gold logged its largest monthly gain since January as investors fretted about recent stock-market declines spurred by China worries. It saw a monthly gain of around 3.4%, which was the largest since January's 8% surge.
December silver added 3.4 cents, or 0.2%, to end at $14.62 an ounce.
China's official manufacturing purchasing managers index fell to a three-month low, delivering a fresh blow to global markets that have spent August rattled by uncertainty about China's economic health. The sharp decline in equities, in turn, lured more investors to the perceived safety of gold.
In the U.S., data showed that the final Markit PMI totaled 53.0 in August, down from 53.8 in July. Also, the Institute for Supply Management said its U.S. manufacturing index fell to 51.1% in August from 52.7% in July.
The key outside markets Tuesday saw Nymex crude oil futures prices sharply lower following big gains scored recently. Nymex crude had surged by over $10 a barrel in less than a week. Tuesday's corrective pullback in crude is not surprising given the recent strong gains. The fact that raw commodity sector leader crude oil has shown signs of a market bottom suggests many other raw commodity markets are also likely bottom out, including the precious metals.
The U.S. dollar index was lower on Tuesday. The greenback bulls have faded early this week following good gains scored late last week.
In a Tuesday research note, Barclays points to a number of bearish factors that could help cap upward moves in the yellow metal. It expects limited physical demand going forward and said the gold market is already factoring in shifting expectations about the timing of a Federal Reserve rate hike to sometime after September.
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