Daily Gold Update

Source: Bill Musgrave, American Gold Exchange

Austin— Gold rallied by 1.1% to close just under $1,187 after subpar manufacturing data in the U.S. and China stoked demand for safe-haven assets.

Orders for U.S. factory goods rose by 2.1% in March, the Commerce Department reported today. While better than February's revised decline of 0.1%, the data fell short of forecasts and suggest continuing weakness in the economy.

China's April PMI fell into contraction at 48.9, the lowest reading in a year, as the slump deepens in the world's second-largest economy. Fearful that growth may decline to less than 7% for the first time since the global financial crisis, the government is planning to increase "adjustments" in policy, which probably means deeper monetary easing.

The PBOC has already slashed interest rates and reduced banking reserve requirements twice in the last six months to stimulate growth and overcome disinflation. Looser monetary policies will further devalue the yuan, which is likely to increase demand for inflation hedges like gold.

Gold received additional support after Charles Evans of the Chicago Fed renewed his call to postpone the first rate hike until 2016. In light of weak recent economic data, including GDP, Evans said today that he "likely will not feel confident enough to begin to raise rates until early next year."

The other precious metals also tracked higher. Silver and platinum jumped 1.9% while palladium rose 1.2%

At the Comex close: June gold rallied $12.30 to $1,186.80; July silver jumped 30 cents to $16.44; July platinum gained $21.20 to $1,150.90; and June palladium added $8.90, to $782.65 an ounce.