Gold prices were little changed on Thursday, hovering around US$1,650 an ounce, as investors weighed a recent improvement in the US economy against the continuing shrinkage of Chinese manufacturing activities.
Bullion prices have fallen more than 2 percent so far this month, after the US Federal Reserve dashed hopes for further asset purchases in its latest policy statement and recent data showed the US economic recovery was well on track.
But some economists said the global economy remains vulnerable this year, as the euro zone debt crisis might flare up again, the US 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.
The weak PMI data shaved some early losses in the dollar index and weighed on gold sentiment.
“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 US$1,800 is still looking quite heavy, and investors are waiting for a cue.”
Spot gold was little changed at US$1,649.69 an ounce by 0317 GMT, down from an intra-day high of US$1,656.01 hit in the early hours. US gold was nearly flat at US$1,649.70.
Technical analysis suggested that spot gold may remain neutral in the range of US$1,643 to US$1,671 during the day, Reuters market analyst Wang Tao said.
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 rangebound 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 US$1,635 to US$1,670 over the past week.
In India, the world’s largest gold consumer, jewellers were closed for a fifth day on Wednesday in protest against an import duty hike on bullion.
Platinum group metals initially turned south after the HSBC China flash PMI data, but have since stabilised near their previous session closing prices.
Spot platinum traded at US$1,633.95 an ounce, and spot palladium stood at US$680.97. The two metals are pressured by a weak economic outlook because of their industrial applications, mainly in autocatalysts.
The platinum-gold spread stood at a discount of US$16 an ounce, after flipping from a premium in the previous session.
