RTRS:Gold sluggish after China factory activity falls
(Reuters) - Gold prices were little changed on Thursday, hovering around $1,650 an ounce, as investors weighed a recent improvement in the U.S. economy against the continuing shrinkage of Chinese manufacturing activities.
Bullion prices have fallen more than 2 percent so far this month, after the U.S. Federal Reserve dashed hopes for further asset purchases in its latest policy statement and recent data showed the U.S. economic recovery was on track.
But some economists said the global economy remains vulnerable this year, as the euro zone debt crisis faces the risk of resurgence, the U.S. recovery is still in a early stage and China faces slower growth.
Economic uncertainties usually benefit gold as a safe haven asset, but a global crisis could easily cause a plunge in the precious metal, together with other financial assets.
China's manufacturing activity shrank in March for a fifth straight month, with the overall rate of contraction accelerating and new orders sinking to a four-month low, the HSBC flash purchasing managers index showed.
Investors are waiting for the euro zone PMI data due later today, to gauge how the economy has fared after Greece managed to avert a chaotic default earlier in the month.
"A lot of people are on the sidelines at the moment," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank.
"We saw some bearish signs, but the market seems to be holding well. The upside at $1,800 is still looking quite heavy, and investors are waiting for a cue."
Spot gold was little changed at $1,649.49 an ounce by 0622 GMT, down from an intra-day high of $1,656.01 hit in the early hours. U.S. gold was nearly flat at $1,649.50.
Technical analysis suggested that spot gold may remain neutral in the range of $1,643 to $1,671 during the day, Reuters market analyst Wang Tao said.
PHYSICAL MARKET MUTED
Asia's physical market was muted, with the narrow price range drying up interest from both buyers and sellers, traders said. The lackluster China data also fanned concerns about China's retail gold appetite.
"People are concerned about China's economic growth. If growth slows down and inflation eases, people may choose not to buy gold," said a Hong Kong-based gold dealer.
"We have been range bound for a while and people are looking at the possibility of breaking lower rather than higher."
Gold has been stuck in a range between roughly $1,635 to $1,670 over the past week.
In India, the world's largest gold consumer, jewelers were closed for a fifth day on Wednesday in protest against an import duty hike on bullion.
The recent economic optimism helped platinum, which usually moves in tandem with riskier assets, regain its premium over gold earlier in the month. But the spread flipped to a discount again this week, with gold standing $16 above platinum.
Spot platinum traded down 0.2 percent to $1,630.69 an ounce, and spot palladium edged up to $682.17.
