Gold prices rose Monday, getting a boost from a round of downbeat data out of the eurozone that underlined worries about global growth prospects, as traders continued to keep an eye on U.S.-China trade talks and tensions surrounding Iran.
“You are seeing risk aversion in the marketplace and that is leading investors to the safe-haven assets,” said James Hatzigiannis, senior strategist at Long Leaf Trading Group.
“More protesting in Hong Kong over the weekend, U.S./China trade negotiations took a regression as per reports, [and] the whole U.S./Iran situation,” have all contributed to that risk aversion, he told MarketWatch, adding that President Donald Trump ordered more troops to the Gulf region to help Saudi’s air and missile defenses and has increased U.S. sanctions on Iran.
Gold for December delivery GCZ19, +1.03% on Comex rose $15.40, or 1%, to $1,530.50 an ounce. December silver SIZ19, +4.54% jumped 83.6 cents, or 4.7%, to $18.685 an ounce.
Prices for both gold and silver are on track for the highest most-active contract finish in more than two weeks, according to FactSet data.
Gold also gained ground after data indicated manufacturing activity in the eurozone contracted more sharply in September, posting its worst reading in nearly seven years. The flash eurozone manufacturing purchasing managers index fell to an 83-month low of 45.6 in September, down from 47 in August. Economists polled by FactSet had forecast a 47.3 reading — a figure of less than 50 indicates activity declined.
“Very disappointing PMI numbers” early Monday renewed recession fears in Europe, Hatzigiannis said.
Among individual country readings, Germany’s manufacturing PMI reading fell to its lowest in more than a decade.
“Gold moved higher on the weaker German PMI print as the dreary survey raises the likelihood of an even more dovish central bank policy shift as the slowdown in the global manufacturing sectors is thought to sit atop the Fed’s ‘wall of worry,’ said Stephen Innes, market analyst at AxiTrader, in a note.
Trade concerns also remain a factor. The cancellation of visits to farms in Montana and Nebraska by Chinese officials rattled stocks and stirred support for haven assets on Friday, as did remarks by Trump, who said he wanted a fully fledged deal with China rather than a limited agreement that addresses particular grievances. But officials said talks would continue in October, as planned, helping to soothe worries, analysts said.
In other metals trade, December copper HGZ19, +0.19% was off 0.3% at $2.60 a pound.
October platinum PLV19, +1.32% rose 2% to $961.60 an ounce, while December palladium PAZ19, +0.03% edged up 0.4% to $1,632.20 an ounce—headed toward another record settlement on Comex.
“The bulls continue to control the palladium market with yet another new all-time high trade,” said analysts at Zaner Metals, in a daily note. Still, “we do suspect the [platinum group metals] markets are limited by a recent South African union vote to impose a limit on wildcat strikes, as that keeps the threat against supply from strikes in check.”