Gold prices likely to trade positive: says Sushil Finance

London (May 5)  Gold climbed 1 percent on Monday, buoyed by weak Chinese factory data and earlier dollar weakness, lifting prices above the prior session's six-week low, though caution over the timing of a U.S. interest rate hike kept prices hemmed within a narrow range.

China's factories suffered their fastest drop in activity in a year in April as new orders shrank, the HSBC/Markit Purchasing Managers' Index (PMI) showed, hardening the case for fresh stimulus measures to halt a slowdown in the world's second-largest economy.

On Friday, spot prices fell to $1,170.20 an ounce, the lowest since March 20, after the Federal Reserve indicated that it saw a recent slowdown in the U.S. economy as transitory and did not rule out an interest rate rise this year.

A rate rise - the first in nearly a decade - would lift the opportunity cost of holding gold, while boosting the dollar, in which it is priced. Investors will be monitoring the key U.S. non-farm payrolls report for April due on Friday, for their impact on the dollar and interest rate
expectations.

Trading across financial markets was thinned by a UK holiday on Monday.

Outlook:  We expect gold prices are likely to trade positive on expectation of US Fed could delay rate hike.

Source: MoneyControl