(For more on the gold bear market, see EXT5.)
Aug. 22 (Bloomberg) -- Gold futures rose for the second time in three days on speculation that demand for jewelry and bars will increase amid signs of a pickup in the economy in China, the world’s second-biggest consumer of the metal.
A preliminary manufacturing index on China today signaled expansion in August following contraction in July. The World Gold Council estimates that sales of jewelry, coins and bars will reach as much as 1,000 metric tons this year in both China and India, the largest buyer.
“Expectations of higher demand from Asia continue to support gold,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
Gold futures for December delivery advanced 0.1 percent to settle at $1,370.80 an ounce at 1:51 p.m. on the Comex in New York, after rising as much as 0.8 percent. Prices have rallied 16 percent since touching a 34-month low of $1,179.40 on June 28.
“We are seeing some value buying at current levels,” McGhee said.
The precious metal slumped into a bear market in April and is down 18 percent this year as some investors lost faith in gold as a store of value amid speculation that the Federal Reserve would start reducing economic stimulus. Since then, gold has rallied as consumer demand rose in China and India, spurring analysts including JPMorgan Chase & Co. and Bank of America Corp. to say prices are bottoming.
Silver futures for December delivery gained 0.3 percent to $23.08 an ounce on the Comex, snapping a three-day slump.
On the New York Mercantile Exchange, platinum futures for October delivery gained 1.4 percent to $1,540.10 an ounce, after reaching $1,544, the highest price for a most-active contract since April 11. Palladium futures for September delivery rose 1.1 percent to $755.05 an ounce.
--Editors: Steve Stroth, Thomas Galatola