Gold rises on persistent hope for economic aid
The price of gold is at its highest level in nearly six months after a weak manufacturing report heightened expectations that the Fed will step in to help the economy.
Gold for December delivery rose $8.40 to finish Tuesday at $1,696 per ounce, the highest since mid-March.
A trade group of purchasing managers said factory production declined in August. The Institute of Supply Management said new orders and employment also fell. It was the latest indication that the manufacturing industry continues to struggle.
And the U.S. isn't alone. China, which is a huge importer of commodities, reported a decline in manufacturing in August. Manufacturing also is weak in Europe, which is struggling with a debt crisis that has sent several countries in the region into recession.
That's raising hope among traders that the Federal Reserve, the European Central Bank and China will take additional steps to improve economic growth. Gold would benefit because it often is used as a hedge against inflation.
Fed Chairman Ben Bernanke has said the Federal Reserve will do more to help the U.S. economy but has not provided specifics such as what type of help and when to expect it. The Fed meets Sept. 12-13.
Traders will be watching for news from the European Central Bank meeting on Thursday and for the U.S. nonfarm payroll figures, which are released Friday.
Dave Meger, vice president of metals trading at Vision Financial Markets, said gold prices could continue to climb because of the hope for economic stimulus measures.
In other metals trading, platinum and palladium prices rose after several auto manufacturers reported higher sales in August. The two metals are used in catalytic converters in vehicles. October platinum gained $30.20, or 2 percent, to end at $1,567.50 an ounce and December palladium increased $12.05 to $641.45 an ounce.
December silver ended up 96.9 cents, or 3.1 percent, at $32.411 per ounce and December copper rose 1.45 cents to $3.469 per pound.
The weaker U.S. manufacturing data also hurt energy prices. Benchmark oil fell $1.17 to end at $95.30 per barrel. Heating oil dropped 3.34 cents to $3.1468 per gallon, gasoline decreased 2.06 cents to $2.9522 per gallon and natural gas rose 5.5 cents to $2.854 per 1,000 cubic feet.
In agriculture contracts, wheat for December delivery fell 0.75 cent to finish at $8.8875 per bushel, December corn rose 5.25 cents to $8.05 per bushel and November soybeans rose 11.75 cents to $17.6825 per bushel.