Gold climbs to three-month high on weak economic data, dollar

By Marcy Nicholson and Eric Onstad

NEW YORK/LONDON (Reuters) - Gold rose to a three-month high 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.

"That 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 in London.

Data also showed that U.S. manufacturing activity was unlikely to recover in the near term, while consumer spending was flat in December.

Spot gold was up 1 percent at $1,128.40 an ounce at 2:32 p.m. EST (1932 GMT), after rising to $1,128.70, the highest since Nov. 3, just short of the 200-day moving average around $1,130 an ounce.

U.S. gold for April delivery settled up 1 percent at $1,128 an ounce.

Also supporting prices were the weak U.S. dollar against a basket of major currencies and comment by Federal Reserve Vice Chairman Stanley Fischer, who said that persistent volatility could hurt U.S. growth and inflation. [USD/]

"Today's remarks seem to show some softening in his tone towards rate hikes, as he notes that he simply 'does not know' whether a March hike will be appropriate," said Royce Mendes, director and senior economist at CIBC Capital Markets.

"He concedes that financial market volatility could delay the tightening that he had anticipated earlier in the year."

Hopes that the Fed will slow the pace of future U.S. rate increases has aided gold by cutting the opportunity cost of holding it and keeping a lid on the dollar.

"In the longer term, we still expect the dollar will go higher ... and we still have three (U.S. interest rate) hikes in our scenario, but there is uncertainty around that ... and gold has benefited," ABN Amro analyst Georgette Boele said.

Global stock markets and oil prices fell following the weak manufacturing reports. [MKTS/GLOB]

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

Spot silver rose 0.7 percent to $14.36 an ounce while palladium was up 0.7 percent at $502.01 an ounce. Spot platinum was down 0.4 percent at $867 an ounce.

(Additional reporting by Manolo Serapio Jr. in Manila; Editing by David Goodman and Meredith Mazzilli)