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PRECIOUS-Gold claws higher after weak factory data in China, Europe

Published 01/02/2016, 10:37 pm
Updated 01/02/2016, 10:40 pm
PRECIOUS-Gold claws higher after weak factory data in China, Europe
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* Gold moves in on 12-week high after gaining 5 pct in Jan

* China official manufacturing PMI at lowest since 2012

* Coming up: U.S. ISM manufacturing PMI at 1500 GMT (Adds details, quotes; changes dateline from MANILA)

By Eric Onstad

LONDON, Feb 1 (Reuters) - Gold edged higher on Monday, extending its recent rally on worries about global economic growth and hopes for easier monetary policy after weak factory data in Asia and Europe.

China's official measure of manufacturing in January fell to the lowest since mid-2012 while factory growth across the euro zone slowed as incoming orders showed no meaningful increase. China data was disappointing, very weak in both manufacturing and non-manufacturing, which coupled with the ongoing turmoil on global markets and uncertainties about growth going forwards have helped gold to get above the $1,115/20 resistance level," said Robin Bhar, head of metals research at Societe Generale (PA:SOGN) in London.

Spot gold XAU= added 0.4 percent at $1,122.18 an ounce by 1103 GMT. Bullion gained 5.4 percent last month, its largest gain since January 2015.

Spot gold touched a 12-week high of $1,127.80 on Wednesday, after the Fed said it was closely watching the global economy and financial markets and their impact on the U.S. economy.

Weaker fourth-quarter U.S. economic growth underpinned hopes that the Federal Reserve would slow the pace of future U.S. rate increases, aiding gold by cutting the opportunity cost of holding non-yielding bullion and keeping a lid on the dollar.

U.S. gold for April delivery GCcv1 rose 0.6 percent to $1,123.10 an ounce.

Holdings of the largest gold-backed exchange-traded fund (ETF), New York's SPDR Gold Trust GLD , increased about 4 percent in January, the most in a year.

"There are a lot of bullish factors out there, but critical levels are approaching and that will be an acid test for the gold market," Bhar added.

Gold may run out of steam at key resistance of $1,130/35, where medium- and long-term downtrend lines converge, he said.

Societe Generale sees gold averaging at $1,040 in the first quarter and $955 in the last quarter of the year.

Hedge funds and money managers boosted their bullish bet in COMEX gold to a 12-week high in the week to Jan. 26, U.S. Commodity Futures Trading Commission data showed on Friday. latest CFTC data (is) showing longs building and shorts closing positions. However, the net long fund position in gold is still 70 percent below the 12-month high," Daniel Hynes, senior commodity strategist at ANZ, said in a note.

Spot silver XAG= rose 0.5 percent to $14.33 an ounce, platinum XPT= slipped 0.2 percent to $869.04 and palladium XPD= was off 0.6 percent at $495.70.

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