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Gold gains for third straight session
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Dollar index down 0.3%
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China's factory activity sees fastest growth in a decade
(Updates prices)
By Seher Dareen
March 2 (Reuters) - Gold prices gained 1% on Wednesday
as strong Chinese economic data dented the dollar and drove some
bets for better physical demand from the top bullion consumer,
although the risk of rising U.S. interest rates capped gains.
Spot gold was up 0.6% at $1,838.20 per ounce by 02:05
p.m. ET (1906 GMT), rising up to $1,844.5 earlier, their highest
in a week.
U.S. gold futures settled up 0.5% at $1,845.40. With strong data out of China and some countries looking to continue with rate hikes, the dollar was weakening against other currencies, providing some support to the gold market, said David Meger, director of metals trading at High Ridge Futures.
The dollar hit a one-week low earlier today after China's yuan gained as the country's manufacturing activity expanded at its fastest pace since April 2012. Since gold is priced in U.S. dollars, a weaker currency makes it more affordable for foreign buyers. The day's gains in prices come after bullion posted its worst month since June 2021 in February after strong U.S. data pointed to a resilient economy, suggesting that the Federal Reserve could deliver more rate hikes to curb inflation. Higher interest rates to rein in consumer prices dim the appetite for bullion since it pays no interest against bond yields. U.S. employment and consumer prices reports in the next two weeks would help investors to gauge the path of interest rates. Spot silver gained 0.5% to $21.01 per ounce. Among the platinum-group metals, palladium jumped 1.2% to $1,434, while platinum rose 0.3% to $955.36, earlier scaling an over two-week high of $966.46. "We're vacillating between an expected increased demand coming from China, along with the concerns of recessionary fears here in the U.S. and elsewhere," Meger said on the recent volatility in platinum and palladium markets. (Reporting by Seher Dareen in Bengaluru; Editing by Shilpi Majumdar and Krishna Chandra Eluri)
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