London - Gold rose for a third day as investors looked for a haven during the equity selloff sparked by concern of a worsening slowdown in China’s economy.
Asian shares started a global selloff after a gauge of Chinese manufacturing fell to a three-year low and European stocks followed after data pointed to weaker growth in the region. The Chinese government’s Purchasing Managers’ Index dropped to 49.7 in August, its first dip below 50 since February.
“Poorer China PMI and a declining stock market is proving supportive for gold,” David Wilson, a metals analyst at Citigroup Inc., said by phone from London on Tuesday. “Downside risk to the price is also limited, with a large subsection of the market thinking that the Fed will keep its powder dry in September.”
The gains extended a monthly advance for gold that was the biggest since January. Investors are scanning data for signs of China’s impact on the global economy and factory gauges from France, Norway and Russia signaled contractions on Tuesday before data from the US that economists predict will show slower growth.
Gold futures
Bullion for immediate delivery climbed as much as 0.8 percent to $1 144.33 an ounce and was at $1 143.30 at 11:13 am in London, according to Bloomberg generic pricing. The metal rose 3.6 percent in last month. Gold futures for December advanced 0.8 percent to $1 141.50 on the Comex in New York.
Traders have reduced bets that the Federal Reserve will raise interest rates in September given the setback in the global economy. Forty-eight percent of 54 economists surveyed from Aug. 27 to 31 by Bloomberg News see a September increase in the benchmark lending rate, compared with 77 percent who forecast such a hike in early August. The policy-setting Federal Open Market Committee next meets September 16 and 17.
“December is now looking more likely than September,” Vyanne Lai, an economist at National Australia Bank in Melbourne, said by e-mail. “This suggests that gold prices may follow a gentler declining trend than previously expected, but the market remains entrenched in a bearish cycle.”
Silver for immediate delivery rose 0.2 percent to $14.65 an ounce, increasing for a fourth day. Platinum was little changed at $1 010.20 an ounce, while palladium lost 1.6 percent to $590.90 an ounce.
BLOOMBERG