BLBG:Gold Halts Two-Day Decline as Stocks Drop on China Manufacturing
Gold rose, snapping two days of losses, after data showed China’s manufacturing contracted in May for the first time in seven months, boosting haven demand as equities fell. Silver, platinum and palladium declined.
Spot gold gained as much as 0.5 percent to $1,376.98 an ounce and traded $1,376.86 at 2:06 p.m. in Singapore. Prices lost 1 percent earlier after U.S. Federal Reserve Chairman Ben S. Bernanke hinted at scaling back stimulus should the world’s largest economy improve further, driving the dollar higher.
The preliminary reading for a Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics missed analysts’ estimates and came in below the level of 50, indicating a contraction. That sent stocks tumbling. Gold is 18 percent lower this year as some investors lost faith in the metal as a store of value and shifted to riskier assets, including equities, amid an improved global economic outlook.
“Gold’s getting a bit of the flight-to-safety trade as equity markets reflect that economic uncertainties are still very much out there,” said Yang Shandan, a senior trader at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “As long as ETF outflows continue, gains will probably be limited.”
Gold tumbled into a bear market in April as holdings in exchange-traded products fell. Total holdings in ETPs backed by gold have fallen 18 percent this year, declining for the past four months, according to data compiled by Bloomberg. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, dropped to 1,020.07 metric tons yesterday, the lowest level since February 2009, according to data on the company’s website.
Bullion for June delivery climbed 0.5 percent to $1,374.50 an ounce on the Comex in New York after falling for nine of the past 10 days. The Dollar Index, a measure against six major peers, retreated 0.2 percent as the yen rallied. The gauge earlier advanced to the highest level since July 2010.
Cash silver dropped 0.4 percent to $22.205 an ounce, platinum lost 0.9 percent to $1,455.40 an ounce, and palladium fell 1.4 percent to $736.10 an ounce.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
