Gold climbed, snapping two days of losses, after data showed China’s manufacturing contracted in May for the first time in seven months, boosting demand for the metal as a protection of wealth as equities fell.
The preliminary reading for a Chinese purchasing managers’ index missed analysts’ estimates and came in below the level of 50, indicating a contraction. Commodities and stocks tumbled, with Japanese equities falling the most since the aftermath of the Fukushima disaster two years ago. Bullion also gained as the U.S. dollar declined.
“Gold is up today, so far, while everything else is down,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “It is possible that the stocks fall has led to nervous investors buying gold again.”
Bullion for June delivery climbed 1.6 percent to $1,389 an ounce by 6:59 a.m. on the Comex in New York. Gold for immediate delivery gained 1.5 percent to $1,390.31 an ounce.
Gold for immediate delivery jumped as much as 2.8 percent and fell as much as 1.6 percent yesterday after the Federal Reserve Chairman Ben S. Bernanke told lawmakers a premature withdrawal of stimulus could endanger economic recovery, while noting the pace of bond purchasing will be reduced if labor market improvement is sustainable.