Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER
Gold granulate is seen at a plant of gold refiner and bar manufacturer Valcambi in the southern Swiss town of Balerna. Picture: REUTERS/MICHAEL BUHOLZER

Bengaluru — Gold prices fell on Monday as investors turned to riskier assets on signs of economic growth after reports of an expanding Chinese factory sector and a rising dollar reduced demand.

Spot gold fell 0.3% to $1,459.23 per ounce by 5.32 SA time. Prices earlier touched their highest since November 22. US gold futures shed 0.5% to $1,465.30.

“A slightly stronger dollar has weighed on investor appetite for gold, as well as some slightly more positive data, so this is causing gold to drift a little bit lower,” ANZ analyst Daniel Hynes said.

An unexpected expansion in factory activity during November in China, the world’s second-largest economy and biggest gold user, spurred investors into equity markets and reduced the interest in safe-haven bullion.

This followed official government data on Saturday that also showed an expansion. Investor demand for gold was further pressured by the rising dollar, which makes dollar-denominated gold more expensive for buyers using other currencies.

The uncertainty about a resolution to the 17-month-old trade dispute between the US and China has supported gold, with reports that a preliminary agreement has now stalled because of US legislation supporting protesters in Hong Kong and Chinese demands that the US roll back its tariffs as part of a first phase deal.

“Nothing particularly has really changed [on the trade front] from last week, the market remains in the dark about how things will progress. Investor appetite for gold is just waning a little bit on lack of direction,” Hynes said.

Gold has risen more than 13% this year mainly due to the trade dispute driving demand for safe assets.

“The fundamentals are still quite supportive; this lull is not going to last too much longer. Maybe into year-end we will see gold prices recommit the uptrend we saw earlier this year,” Hynes said, adding until then gold will trade at $1,450-$1,500.

Silver fell 0.6% to $16.92 per ounce, platinum shed 0.4% to $896.72 and palladium was down 0.1% to $1,840.09. 

Reuters