Investing.com - Gold was flat to weaker in Asia in light trade Thursday with the focus squarely on the timing of a widely expected Federal Reserve rate hike.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded at $1,131.00, down 0.04%. Silver for December delivery rose 0.04% to $14.795 a troy ounce.
Copper for December delivery fell rose 0.21% to $2.299 a pound.
Overnight, gold futures ticked up amid a wave of short covering, even as Chinese manufacturing data slumped to fresh six-and-a-half year lows exacerbating concerns of a forthcoming recession in the world's second-largest economy.
In overnight trading, the Flash China Caixin Manufacturing Purchasing Index, a preliminary gauge of Chinese factory activity, fell to 47.0 in September, marking its lowest level in 78 months. New orders dipped by 0.6 to 46.0, while new export orders plummeted 0.8 to 45.8. Analysts expected the index to tick up slightly to 47.5 from a final reading of 47.3 in August. The regression in manufacturing activity in September represents the seventh straight month of monthly declines.
Any reading below 50 provides signals of imminent contraction.
It came one day after the Asian Development Bank lowered its forecast for 2015 economic growth in China from 7.2% to 6.8%, as the largest nation in Asia continues to transition from a manufacturing to consumer-based economy. By the end of 2016, the bank anticipates that Chinese economic growth will slow to 6.7% on an annual basis. Last year, China's economy grew by 7.3%.
China is the world's largest producer of gold and the world's second-largest consumer of the precious metal behind India.
The downturn in Chinese manufacturing began in the middle of 2014, coinciding with the rapid rise of the dollar. As a result, the yuan, which is loosely pegged to the dollar, started to appreciate against a number of non-dollar currencies, weighing on export prices.
In August, the People's Bank of China rattled global markets by devaluing the yuan in an effort to bolster exports and stave off deflationary risks. Last week, Fed chair Janet Yellen noted that heightened concerns about growth in China and a number of emerging markets have contributed to increased volatility in the global economy. On Thursday evening, Yellen is scheduled to speak on inflation dynamics and monetary policy during an appearance at the University of Massachusetts-Amherst.
An interest rate hike is viewed as bearish for gold, which is not attached to interest rates or dividends. Gold struggles to compete with high-yield bearing assets in raising rate environments.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.