Investing.com - Gold prices gained in Asia on Friday as an upbeat reading on manufacturing in China aided sentiment regionally that world's second largest economy remained on track.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange rose 0.17% to $1,324.40 a troy ounce.
The Caixin manufacturing PMI jumped in August to 51.6, beating a 50.9 level expected, data showed on Friday, showing the fastest pace of new orders in three years.
The figure follows the official manufacturing Purchasing Managers' Index from China on Thursday came in at 51.7 in August, beating expectations. Analysts polled by Reuters expected China to post official PMI of 51.3 for August, a tick down from 51.4 in July. A reading above 50 indicates expansion, while a reading below that signals contraction.
Overnight, gold prices edged higher on Thursday, as the dollar weakened, after subdued inflation data curbed investor expectations of a rate hike later this year while renewed geopolitical tensions lifted sentiment on the precious metal.
Gold resumed its climb higher, following a two-day consolidation, as data showed consumer spending fell short of expectations while inflation increased at its slowest pace in nearly two years, curbing investor expectation that the Federal will hike its benchmark rate later this year.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased 0.3%, the Commerce Department said on Thursday, falling short of expectations of a 0.4% increase.
In the 12 months through July, the core PCE price index increased 1.4% after advancing 1.5% in June. That was the smallest year-on-year increase since December 2015.
The duo of reports comes a day ahead of nonfarm payrolls, expected to show that the U.S. economy created roughly 180,000 jobs in July.
Gold is sensitive to moves lower in both bond yields and the U.S. dollar – A lower dollar makes gold cheaper for holders of foreign currency while a fall in U.S. rates, reduce the opportunity cost of holding non-yielding assets such as bullion.
Meanwhile, geopolitical tensions resurfaced, lifting demand for safe haven gold, following North Korea’s missile launch over Japan earlier this week, as South Korea's air force conducted an exercise with two U.S. nuclear-capable bombers above the Korean peninsula on Thursday.
Following its recent rally, gold is poised to post a monthly gain in August amid an increase in buying activity among money managers, after net bullish bets on gold rose to the highest in nine-months, according to a report from the Commodity Futures Trading Commission (CFTC) last week.