Gold rises on China PMI data; flirts with $1,600

  • Share via facebook
  • Tweet this
  • Bookmark and Share
Gold prices could be capped by worries about the debt crisis in Cyprus and the weakness of the euro against the US dollar.

Gold prices could be capped by worries about the debt crisis in Cyprus and the weakness of the euro against the US dollar.

Gold firmed on Monday, as signs that China's economic recovery was gaining traction could boost demand for commodities, but prices could be capped by worries about the debt crisis in Cyprus and the weakness of the euro against the US dollar.

Tension in the Korean peninsula has yet to trigger a rush in purchases from investors in Asia, but a full-scale conflict between the two Koreas could potentially boost gold's safe-haven appeal in times of uncertainty.

Gold hit an intraday high of $1,600.81 an ounce and stood at $1,598.31 by 0331 GMT, up $2.14. The precious metal ended the quarter down around 4 percent after stock markets surged and the euro stayed weak against the dollar.

Gold rallied to a 1-month high in March on concerns about fiscal stability in Europe after the European Union gave Cyprus an ultimatum to raise billions of euros it needs to clinch a bailout deal or face a likely exit from the currency zone.

"We are in an uncertain market. Normally a strong PMI data from China would tend to draw investors towards stocks and not support gold prices, but this time we see a reverse. The North Korea tension is adding to the market uncertainty," said Brian Lan, managing director of GoldSilver Central Pte Ltd.

"We see physical buying by the retail investors during price dips and this helped to support the prices should go up above $1,600. If everything goes well, it seems like gold could move on to a higher

Premiums for gold bars were largely unchanged in Singapore at 1.20 to $1.50 to the spot prices in London.

China's factory production ran at its fastest in 11 months in March, according to the official manufacturing purchasing managers index published on Monday, though the rise to 50.9 missed market expectations of a bigger headline jump.

Tokyo gold futures gained and investors closely watched the developments in the Korean Peninsula after South Korean President said there would be strong and swift military response to any North Korean provocation. 

Tensions have been high since the North's young new leader, Kim Jong-un, ordered a nuclear weapons test in February, breaching UN sanctions and ignoring warnings from North Korea's closest ally, China, not to do so.

"There was some early buying on TOCOM. It may be related to Korea, but nobody talks about it here," said a dealer in Tokyo.  "Some places are still closed for holidays, so the market is quiet and the volume is thin, which exaggerates movements."   

The euro started the quarter on a weak note on Monday, staying near a four-month low on worries that the euro zone's rescue for Cyprus might have opened a can of worms and as Italy struggles to find a way out of its political impasse.

Financial markets in Australia, Hong Kong and Europe are still closed for Easter holidays.

US gold futures for June were at $1,598.90 an ounce, up $3.20.  

Hedge funds and money managers sharply raised bearish bets on copper and trimmed net long positions in gold and silver futures and options in the week to March 26, Commodity Futures

Trading Commission data showed on Friday.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Dubai gold dealers shun Turkish bars on fear of links to Iran

Dubai gold dealers shun Turkish bars on fear of links to Iran

Trade in Turkish gold bars to Iran via Dubai is drying up as...

Glitter, glamour and gold

Glitter, glamour and gold

Gold has long been seen by experts as a hedge against rising...

Turkish gold trade booms to Iran, via Dubai

Turkish gold trade booms to Iran, via Dubai

Couriers carrying millions of dollars worth of gold bullion in...

Most Discussed
  • 15
    Germany puzzled as UAE think tank ordered to close

    Matt, your words sound kind of funny given the role the Britain has played in this region for so many decades.
    And given the democratic tradition that... more

    Thursday, 17 April 2014 7:10 PM - one of the joes
  • 10
    UAE father who whipped son to death wins appeal

    "Under Sharia, a parent cannot be executed for killing their child"
    A spouse could be executed if he/she kills his/her spouse, as none of them is... more

    Friday, 18 April 2014 3:38 PM - Nihar
  • 3
    To diet or not to diet?

    It is best to eat by your blood type. Following this diet is miraculous. Generic diets don't always work as certain foods are not good for the individual... more

    Friday, 18 April 2014 11:49 AM - Shamira Mitha
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams