Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold surged 1% to close at $1,128, a three-month high, as weak U.S. and global economic data continued to fuel safe-haven demand.

U.S. manufacturing contracted again in December, with the ISM index registering 48.2%, marking the fourth straight month in which more companies are shrinking than expanding. It is the longest period of contraction since 2009, at the height of the Great Recession.

Factory output is also weak in Asia and Europe. China's manufacturing fell to the lowest level in nearly four years last month, and South Korea and Taiwan, leaders in tech production, also slowed. The Eurozone's output fell in January, according to Markit's PMI report, amid lackluster global demand.

Consumer spending, which comprises more than 70% of U.S. GDP, was flat in December and PCE Index, the Fed's preferred gauge of inflation, grew at an annualized rate of just 0.1%. Oil sold off again, dropping nearly 6% in response to the weaker global factory data.

The dollar fell 0.5% against major rivals as traders speculate that the Fed will be unable to raise interest rates until much later this year, if at all. The CME FedWatch tool now predicts September for the next hike. A weaker dollar supports gold and other commodities by making them less expensive to users of other currencies.

The other precious metals were mostly higher, with silver and palladium gaining 0.7% while platinum slipped o.4%.

At the Comex close: April gold surged $11.60 to $1,128; March silver added 10 cents to $14.34; April platinum slid $3.50 to $870.80; and March palladium added $3.55, to $502.05 an ounce.