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Gold gains as disappointing China data bruises Asia stocks

Published 2019-04-30, 03:53 a/m
© Reuters.  Gold gains as disappointing China data bruises Asia stocks
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* China PMI in April at 50.1 vs 50.5 in March

* Markets await FOMC meeting due to commence later on Tuesday

* Palladium near 2-wk low

By Arijit Bose

April 30 (Reuters) - Gold prices rose on Tuesday as lacklustre Chinese factory activity data sent Asian shares lower, rekindling concerns about the health of the global economy.

Investors now await the U.S. Federal Reserve's two-day policy meeting starting later in the day for clues on the interest rate outlook.

Spot gold XAU= rose 0.3 percent to $1,283.44 per ounce at 0731 GMT. U.S. gold futures GCcv1 were up 0.3 percent at $1,285.30 an ounce.

"There is a broad bearish sentiment across Asia market opening this morning as a very disappointing China manufacturing PMI triggered a sell-off in currencies and emerging markets and equity markets," said Margaret Yang, an analyst with CMC Markets in Singapore.

Reading on the official Purchasing Managers' Index (PMI) for manufacturing unexpectedly fell to 50.1 in April from March's reading of 50.5 stoking concerns about the economic state of China and pressuring Asian equities lower. MKTS/GLOB

Gold is generally used by investors as a safe-haven investment against economic and political concerns.

The metal has, however, come under pressure of late as equity markets have hit record highs and most economic data from far and wide have pacified anxieties about the pace of global growth.

Gold is yet to overcome the bearish factors, and any rallies in the metal might will be short-lived, INTL FCStone analyst Edward Meir said in a note.

"We do not recommend establishing length at current levels on gold, given the lack of upside drivers. Although the dollar is not moving higher on the back of strong macro readings, it is not coming down either; neither are the U.S. long-term rates," Meir added.

The metal had retreated from a more than one-week high hit on Monday after Wall Street stocks were propelled to a record high by data showing U.S. consumer spending increased by the most in more than 9-1/2 years in March. technical trend has turned more bearish for gold, CMC Markets' Yang said.

Investors now await a raft of economic data from the euro zone and will also focus on the commencement of the Federal Open Market Committee (FOMC) meeting that will determine the future trajectory of interest rates in the United States.

The U.S. central bank is widely expected to hold interest rates steady as policymakers balance recent stronger-than-expected U.S. economic growth against sluggish inflation. silver XAG= gained 0.3 percent to $14.95 per ounce, while platinum XPT= rose 0.4 percent to $897.25.

Palladium XPD= , on the other hand, fell percent 0.4 percent to $1,365.50 an ounce. The metal had slumped over 7 percent to a two-week trough at $1,261.50 on Monday.

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