Gold, copper tick higher after HSBC China services index shows pickup

Investing.com - Gold and copper prices ticked higher in Asia on Wednesday on a gain in a services survey in China that showed a pickup in activity.

In China, second to India in gold purchases, the April HSBC services PMI rose to 52.9. The PMI was at 52.3 in the previous month.

Japanese markets are closed again today as they mark Constitution Day public holiday, and the final day of the so-called Golden Week period.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery rose 0.11% to $1,194.50 a troy ounce.

Silver for July delivery fell 0.10% to $16.563 a troy ounce.

Copper, meanwhile, gained 0.13% to $2.933 a pound, after the China services data. China is the world's top importer of copper.

Overnight, gold futures moved slightly higher on Tuesday extending gains from one session earlier, as the dollar weakened amid a soft batch of U.S. economic data.

The U.S. trade deficit in March soared to its highest level in more than six years, as a prolonged labor dispute at critical West Coast ports and the stronger dollar weighed heavily on foreign trade.

In its monthly report, the U.S. Department of Commerce said the nation's trade deficit surged 43.1% to $51.4 billion, its highest level since Fall, 2008. The percentage increase was also the highest since December, 1996. Gold reached a session-high of 1,199 after the release.

When adjusted for inflation, the deficit rose $16 billion to $67.2 billion in March, up from $51.2 billion a month earlier. March exports rose modestly to $187.8 billion, while imports skyrocketed by more than $17 billion to $239.2 billion for the month.

The widening of the trade deficit has led to rising concern of a contraction in the economy in the first quarter.

Last week, the Commerce Department said GDP for the first quarter rose by 0.2%, in line with paltry estimates from the Federal Reserve of Atlanta. A surge in exports reflecting the stronger dollar served as the heaviest drag on GDP growth, the Commerce Department said.

Following its April meeting last week, the Federal Open Market Committee reiterated that it will take a data-driven approach to the timing of its first interest rate hike since the end of the Financial Crisis.

Gold, which is not attached to interest rates or dividends, struggles to compete with high yield-bearing assets in periods of rising rates.

Elsewhere, Markit's Purchasing Managers Index (PMI) fell to 57.4 in April, below a preliminary reading of 57.8 earlier in the month. In March, the PMI soared to 59.2 the highest level since August.

Separately, the Institute of Supply Management reported that its non-manufacturing purchasing manager's index increased to 57.8 last month, above forecasts of 56.2 and up from 56.5 in March.