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PRECIOUS-Gold extends gains as China stocks slip on weak PMI

Published 01/02/2016, 05:57 pm
Updated 01/02/2016, 06:00 pm
© Reuters. PRECIOUS-Gold extends gains as China stocks slip on weak PMI
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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 China stocks, updates prices)

By Manolo Serapio Jr

MANILA, Feb 1 (Reuters) - Gold advanced at the start of the month on Monday, extending gains after ending January with its biggest monthly jump in a year, as poor Chinese manufacturing numbers underlined the weak outlook for the global economy.

China's stocks fell after an official measure of manufacturing in the world's No. 2 economy hit its lowest since mid-2012. into the world's largest gold-backed exchange-traded fund were the strongest in a year last month as investors moved into gold due to volatility in other assets including equities.

Spot gold XAU= was up 0.3 percent at $1,120.66 an ounce by 0641 GMT. Bullion gained 5.4 percent last month, its largest gain since January 2015.

Strong inflows into gold exchange-traded funds, Chinese buying ahead of the Lunar New Year and support from the volatility in other asset classes combined to boost gold in January, said Mark Keenan, head of commodities research in Asia at Societe Generale (PA:SOGN).

"But in the context of a rising interest rate outlook in the U.S., it's going to be very difficult for gold to hold on to these gains," he said.

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

U.S. gold for April delivery GCcv1 rose 0.4 percent to $1,121.10 an ounce.

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

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.

Risks from China remained after its official Purchasing Managers' Index stood at 49.4 in January, below the 50-point mark that separates growth from contraction, and the weakest reading since August 2012. economic growth braked sharply in the last quarter of 2015, expanding at an annual 0.7 percent rate. data underpinned hopes that the Federal Reserve would slow the pace of future U.S. rate increases, aiding gold.

Spot silver XAG= rose 0.3 percent to $14.30 an ounce, platinum XPT= slipped 0.4 percent to $867.55 and palladium XPD= was off 0.3 percent at $496.96.

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