Investing.com -- Gold rose sharply on Friday hovering near 27-month highs, as soft manufacturing data in China and further indications of a delayed interest rate hike by the Federal Reserve bolstered the yellow metal.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,323.00 and $1,344.25 an ounce, up $18.40 or 1.39% on the session. Over the last week, Gold has surged more than 5% as investors have piled into the safe-haven asset in the wake of a surprising decision by U.K. voters to support a measure paving the way for Britain's departure from the European Union. On Thursday, Gold ended the first six months of 2016 up nearly 25%, completing one of its strongest first halves on record.
Gold likely gained support at $1,247.30, the low from June 8 and was met with resistance at $1,355.60, the high from June 24.
In China, the Caixin Manufacturing Purchasing Managers' Index dropped by 0.6 to 48.6 in June, falling at its swiftest pace in four months. It came as new orders moved lower for the month and companies in the sector cut staffing levels at a solid pace. Analysts expected to see a reading of 49.1 At the same time, the government's official Manufacturing PMI ticked down by 0.1 to 50.0, falling to its lowest level since February's reading of 49.0. Any reading under 50.0 provides signals of contraction in the industry. The Chinese government's official reading serves as a gauge for activity among large and state-owned companies in the sector. China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
Elsewhere, Fed governor Stanley Fischer cautioned that it could be some time before the U.S. central bank will be able to determine the long-term effects of the Brexit referendum on monetary policy. In the meantime, Fischer said he is hopeful the Fed can continue tightening at a "slow, very gradual" pace amid signals of an improved economy. The Federal Open Market Committee (FOMC) will re-assess the implications of the Brexit vote on the timing of its next rate hike when it meets again on July 26-27, he added.
"We are going to have to wait and see,” Fischer said in an interview with CNBC. “It clearly is a huge event for the U.K. and it’s an important event for Europe. Our direct trade with Britain is not going to make a huge difference to us, but it could set off -- there are a lot of things that will follow from Brexit for Europe, for the United Kingdom, and those are the things we will have to be thinking about."
Investors who are bullish on Gold are in favor of a gradual tightening of monetary policy by the Fed. Gold, which is not attached to interest rates, struggles to compete with high-yield bearing assets in rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.25% to an intraday low of 95.23, before rallying slightly to 95.48 in U.S. afternoon trading. The index dropped by nearly 3% over the first half. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for August delivery soared 0.977 or 5.25% to $19.600 an ounce. The front month contract for Silver surged approximately 10% for the week, posting its strongest weekly move in nearly three years. Silver is now approaching its highest level since August, 2014.
Copper for September delivery gained 0.025 or 1.12% to $2.22 a pound.