Friday, 21 August 2015 12:31
MELBOURNE: Spot gold hit its highest level since early July on Friday after weak factory growth in China fanned worries that the world’s second largest economy may be slowing sharply, sparking safe-haven demand for the metal.
Activity in China’s factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, a private survey showed.
Asian stocks fell more than 3 percent on Friday as fears took hold of a China-led deceleration in global growth, before stabilising down around 1 percent.
A mini debt crisis in northern China is exposing cracks in a financial pillar of the country’s economic revival plan: the $ 430 billion loan-guarantee industry.
“We’ve definitely seen a bit of a safe-haven bid return for gold,” said analyst Daniel Hynes of ANZ in Sydney.
Growing expectations a US rate hike would be delayed to December after a soft run of data also supported gold, he added.
Spot gold rose 0.8 percent to $ 1,161.60 an ounce by 0625 GMT, having struck the highest since July 7 at $ 1,168.40. It was targeting gains of more than 4 percent for the week, its biggest weekly advance since mid-January.
US gold was bid up 0.7 percent to $ 1,161.10, having also hit its loftiest level in over six weeks.
“A break out above the $ 1156-1157 level would signal a further extension of the (upwards) trend,” said a trader in Singapore.
The dollar fell to its lowest against a basket of currencies on Friday, making gold more affordable to holders of other currencies.
The dollar’s fortunes have diminished after comments by Federal Reserve officials this week suggesting they could not yet pin down a September rate rise given lagging inflation and a weak global economy.
Still, US home resales rose to a near 8-1/2-year high in July and factory activity in the mid-Atlantic region picked up this month, fresh signs of steady economic growth that likely keeps the Federal Reserve on track to raise interest rates this year.
Elsewhere, Prime Minister Alexis Tsipras resigned on Thursday, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to cave in.
Silver broke resistance around $ 15.60 to hit its most expensive since July 13, with selling being easily absorbed. Spot silver was last bid at $ 15.53, and little changed.
