Precious metals shine

Unrest in the Middle East and weak Chinese economic data boost prices

Safe-haven buying amid keener uncertainty in world markets boosted bullion prices on Monday, 04 January 2016. Unrest in the Middle East and weak Chinese economic data worked to lift gold to a three-week high, while putting downside pressure on stock markets worldwide.

February Comex gold ended up $14.60 at $1,074.80 an ounce. March Comex silver ended up $0.067 at $13.87 an ounce.

The precious metals did back down from their daily highs as the trading day progressed. The key outside markets were in a bearish posture for the metals on Monday as the U.S. dollar index moved higher as the day wore on, while crude oil prices posted modest losses.

There was anxiety in the marketplace to start the trading week and the new trading year on Monday. World stock markets were under selling pressure partly due to rising tensions in the Middle East.

Meantime, there was another downbeat economic report coming out of China that sunk Asian stock markets and has spilled over into weaker European and U.S. equity markets on Monday. China's stock market sank the daily permissible limit and trading was halted. The Shanghai stock index dropped nearly 7% on Monday. China's Caixin manufacturing purchasing managers index (PMI) came in at 48.2 in December from 48.6 in November, for the 10th month in a row with a reading below 50.0. A number below 50.0 suggests contraction in the sector.

In other overnight news, the Euro zone manufacturing PMI came in at 53.2 in December from 52.8 in November. A reading of 53.1 was forecast.

The U.S. manufacturing PMI was also a miss to the downside on Monday, showing a reading of 48.2 in December from 48.6 in November. A reading of 49.0 was expected. The U.S. PMI report did give gold a brief boost to its daily high, but those gains could not be held.

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