By Sarah Turner and Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Gold futures moved higher Thursday after data signaled an improvement in manufacturing conditions in China, and amid expectations that seasonal demand from India could support prices.
“Gold prices are likely to move higher in the short term and may be helped by a pickup in Indian festive buying ahead of Diwali and the Indian wedding season, we believe,” strategists at HSBC wrote, in a report.
Gold for December delivery GCZ2 +0.44% rose $3.90, or 0.2%, an ounce to $1,723.20, extending a gain from regular trading on the Comex division of the New York Mercantile Exchange Wednesday, when the precious metal climbed $7 to $1719.10 an ounce. Read: Gold gains as floor trading reopens.
The HSBC strategists said gold has likely been supported recently by month-end position squaring, and could see more upside after managing to stay above the $1,700-an-ounce mark.
The upward move for most metals on Thursday was further supported by encouraging manufacturing data from China. The official Purchasing Managers’ Index moved back into expansion territory and rose to 50.2 in October compared to 49.8 in September.
The private-sector PMI released by HSBC increased to an eight-month high of 49.5. See: China PMI surveys point to ongoing recovery.
“There are thus increasing signs of the Chinese economy gathering pace again — indeed, we believe it may already have bottomed out,” analysts at Commerzbank said in a note.
“More robust economic growth again, supported among other things by numerous infrastructure projects, is likely to spark solid demand for commodities in general and for metals in particular,” they said.
Meanwhile, Edward Meir, strategist at INTL FCStone, said that caution ahead of monthly employment data from the U.S. may limit market moves in the short term.
“With the nonfarm payroll numbers out on Friday and U.S. elections approaching next week, investors will gravitate to the sidelines and likely defer from taking any major positions,” he said.
December silver futures SIZ2 +1.02% were up 18 cents at $32.49 an ounce while December copper futures HGZ2 +1.17% rose 3 cents to $3.55 per pound.
Platinum for December delivery PLZ2 +0.57% declined 40 cents to $1,576.60, while January palladium PAZ2 +1.18% futures gained $4.45 to $614.25 an ounce.
Sarah Turner is MarketWatch's bureau chief in Sydney.
Sara Sjolin is a MarketWatch reporter, based in London.
