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Gold prices down in Asia after China PMIs, copper gains on upside trend

Gold prices dipped in Asia on Friday as a pair of manufacturing surveys out of China showed upside momentum dimming further easing hopes, and copper gained slightly. On the Comex division, gold for June delivery traded down 0.22% to $1,232.90 a troy ounce. Silver futures for May delivery eased 0.35% to $15.410 a troy ounce, while copper futures gained 0.09% to $2.185 a pound. The Caixin manufacturing PMI for March came in at 49.7, compared with a level of 48.2 seen and 48.0 for the final in February. A level below 50 denotes contraction. Just before the Caixin, the semi-official manufacturing PMI for March came in at 50.2, compared to 49.3 seen and a final 49 in February. That represented the first gain above 50 in eight months. The non-manufacturing PMI came in at 53.8, compared to 52.7 for the final in February. The February month was said to be impacted by a drop in business during the week-long Chinese New Year holidays. In Japan, the Tankan All Big Industry CAPEX survey came in at minus 0.9%, below the 0.7% drop expected. That was the lowest in nearly three years, with expectations to worsen in the coming quarter, raising questions about the next policy steps. A positive figure indicates the majority of firms see better business conditions. Earlier, the AIG manufacturing index for March in Australia came in at 58.1, up sharply from 53.5 in February. The Japan manufacturing PMI came in at 49.1 as expected, the same level as the final in February. Overnight, gold posted modest gains on Thursday ahead of a closely-watched U.S. employment report for the month of March, capping its strongest quarter in three decades. Since opening the New Year around $1,065, gold has surged more than $150 an ounce or 15%, as investors have sought shelter in the safe-haven asset amid a China-led global economic slowdown. As widespread financial and economic risks have mounted abroad, Federal Reserve chair Janet Yellen has sent strong indications that the U.S. central bank will remain cautious with the timing of its next interest rate hike, providing additional upside pressure to the precious metal. With the significant gains over the last three months, gold completed its best quarterly performance since the third quarter of 1986.Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.On Friday, the second quarter will kick off with March’s critical U.S. jobs report, which could provide key insight into the Federal Open Market Committee’s (FOMC) decision-making process when it meets next in late-April. Earlier this week, Yellen noted that the U.S. economy has displayed remarkable resiliency as the labor market continues to exhibit dramatic improvements. Analysts expect monthly nonfarm payrolls to increase by 210,000 for the month, while the unemployment rate remains steady at 4.9%. In February, U.S. non-farm payrolls shot up by 240,000, pushing the three-month average above 225,000.While the headline unemployment rate remained at eight-year lows last month, economists were also encouraged by a 0.2% decline in U-6 unemployment, a broader gauge of the employment situation nationwide. The U-6 rate, which measures the level of workers marginally attached to the labor markets and no longer actively looking for a job, stood at 9.7% in February. By comparison, the Fed’s preferred gauge of U.S. unemployment, peaked at 18% in 2010 at the end of the Financial Crisis. Analysts will also keep a close eye on monthly wage gains after average hourly earnings slumped by 0.1% a month earlier. Also on Thursday, Federal Reserve of Chicago president Charles Evans indicated that he could support a June interest rate hike with sufficient improvements in the economy, one day after strongly hinting that it could be premature to raise short-term rates in April. The FOMC has held its benchmark Federal Funds Rate steady at a level between 0.25 and 0.50% at its first two meetings of the new year. In December, the FOMC abandoned a seven-year zero interest rate policy by approving its first rate hike in nearly a decade. Any rate hikes this year are viewed as bearish for gold which struggles to compete with high yield bearing assets in rising rate environments.

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