Gold price moves off lows on positive EU manufacturing data

Otmane El Rhazi from The Bullion Desk.

The gold price eked out some modest gains early on Friday after positive European manufacturing data offset the dollar’s gains.

Spot gold was last at $1,185.80/1,186.50 per ounce, up $3.30 on Friday’s closed but confined to a narrow $7 intraday range so far. Silver at $16.59/16.64 was unchanged, having also traded in negative territory earlier.

Growth in eurozone manufacturing production hit a 10-month high in March at 52.2 against consensus at 51.9.

“The sector’s growth has been accelerating since November, confirming renewed strength after it nearly returned to contraction,” FastMarkets analyst Tom Moore said. “This implies that the ECB’s very loose monetary policy is working as intended, with the TLTROs stimulating spending in the real economy.”

The dollar moved off intraday highs of around 1.0728 against the euro – it was last at 1.0760, providing impetus for gold although it remains comparably strong against all other currencies.

Earlier, the Chinese official manufacturing PMI rose to 50.1 in March from 49.9 in February. But while the final HSBC reading of 49.6 was above the flash reading of 49.3, it was down from 50.7 in February and signalled renewed deterioration in the health of the sector.

Investors will continue to watch the Iranian nuclear negotiations, which have now surpassed their soft deadline but are expected to continue this morning.

Any deal in which sanctions are lifted would be likely to hit the oil market hardest, analysts said, particularly with early indications suggesting that Iran is storing more than 30 million barrels off its coasts.

“We have a real Persian bazaar in the mix, and it remains to be seen how all this plays out. As stated previously, we suspect that some sort of an agreement will be reached, in which case the dollar will likely sell off slightly, as will oil, thus giving gold a bit of a lift,” INTL FCStone’s Ed Meir said.

Also due from the US are the US ADP non-farm employment change, the final manufacturing PMI, the ISM manufacturing PMI, construction spending and total vehicle sales – which will be watched closely for movements in the PGMs.

“We will stay quiet now ahead of the Easter break unless external news dictates otherwise. NFPs are released on Friday… I’m not looking for much and would be tempted to stay sidelined until the Easter break is out of the way,” Marex Spectron’s David Govett said.

Platinum was last down $2 at $1,135/1,140 per ounce but palladium was $7 higher at $737/742.

(Editing by Mark Shaw)

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