Investing.com - Gold kicked off the new year with strong gains on Monday, amid mounting geopolitical tensions in the Middle East after Saudi Arabia cut diplomatic ties with Iran over the weekend.
The move followed a weekend storming of the Saudi embassy in Tehran in response to the kingdom's execution of a prominent Shiite cleric.
Gold for February delivery on the Comex division of the New York Mercantile Exchange surged $17.10, or 1.61%, to trade at $1,077.30 a troy ounce during U.S. morning hours. It earlier rose to $1,079.10, the most since December 22.
Also on the Comex, silver futures for March delivery jumped 32.2 cents, or 2.33%, to trade at $14.12 a troy ounce.
Investors were looking ahead to the ISM report on U.S. manufacturing activity later in the day for further clues on the strength of the economy and the timing of future rate hikes. The data is expected to show the sector is still in contraction after having hit a 6-1/2-year low in November.
With the first U.S. rate hike since 2006 out of the way, investors are now focusing on the pace of future rate increases. The Federal Reserve, from its forecasts, is anticipating four rate hikes in 2016.
Elsewhere in metals trading, copper tumbled on Monday, as the release of weak Chinese manufacturing activity data weighed as investors returned to the markets after the long New Year weekend.
Copper traders view Chinese factory activity as an indicator of the nation's copper demand, as the red metal is widely used by the sector.
The Caixin manufacturing purchasing managers’ index for December released earlier slipped to 48.2 from 48.6 in November, contracting for a tenth month and coming in below expectations for 49.0.
Meanwhile, the official manufacturing purchasing managers' index published on Friday inched up to 49.7 last month from November's three-year low of 49.6. A reading below 50.0 indicates industry contraction.
The downbeat data underlined worries the world's second largest economy may still be losing momentum despite a raft of stimulus measures in recent months.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.