Gold prices dip in Asia as sentiment up on Chin PMIs, risk views grow - Sean Seshadri

Gold prices dipped in Asia on Thursday as regional signals on growth in China came in upbeat, aiding sentiment for more risk assets.

On the Comex division of the New York Mercantile Exchange dipped 0.26% to $1,170.85 a troy ounce. Silver futures on the Comex fell 0.21% to $16.447 a troy ounce, while copper futures edged up 0.04% as manufacturing data from China lifted sentiment for thw world's top importer of the industrial metal.

China reported Thursday that the semi-official CFLP manufacturing index came in at 51.7 for November, compared with a 51.0 level seen, and up from 51.2 the previous month. The CFLP non-manufacturing PMI came in at 54.7, compared to 54.0 last month, subsequent figures from the private Caixin manufacturing PMI rose to 50.9 in November, beating an expected 50.8 level.

The Caixin index has now been above the 50-point neutral level which separates expansion in activity from contraction for five straight months, adding to views that in the world's second-largest economy growth has stabilized thanks to a credit and construction boom.

Overnight, gold prices dropped once again on Wednesday, as widespread expectation of an interest-rate increase by the Federal Reserve in December dampened the metal's short-term outlook.

Investors reckon the Federal Reserve will raise interest rates at a meeting next month, and the odds of a rate increase is now at 94%, according to Fed fund futures tracked by the CME. Since gold doesn't bear interest, it works hard to compete when interest rates climb. Thus, the price of gold is expected to remain weak in the coming month.

What is more, investors are also looking ahead to the Italian referendum this weekend, when the country will head to the polls to vote on a Constitutional reform. A “no” vote could be a sign of further political uncertainty and increase prices.

Meanwhile, gold demand in India, one of the globe's biggest buyers of the metal, is declining, with gold traders saying imports could fall to just a combined 60-70 tons over the next two months, noted Commmerzbank AG in a note to investors. India has launched a plan to swap nearly 86% of currency notes in circulation, hitting consumer demand during the peak season for weddings in the country where gold is a typical gift..