Gold remains lower after consumer spending data

nvesting.com - Gold remained in negative territory on Monday, despite data showing that U.S. personal spending declined for the first time in 20 months in December.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery shed $7.00, or 0.55%, to trade at $1,272.20 a troy ounce during U.S. morning hours. Prices held in a range between $1,271.30 and $1,283.90.

Futures were likely to find support at $1,252.10, the low from January 29, and resistance at $1,298.60, the high from January 27.

The Commerce Department said that personal spending fell 0.3% in December, worse than expectations for a decline of 0.2%.

Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity.

The report also showed personal income rose 0.3% in December, above forecasts for 0.2%.

Meanwhile, the core PCE price index was flat in December, compared to expectations for a 0.1% gain. The core PCE price index rose at an annualized rate of 1.3% in December, in line with forecasts.

The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.

On Friday, gold rallied $23.30, or 1.86%, to settle at $1,279.20 after data showed the U.S. economy grew less than expected in the fourth quarter.

Gold prices ended January with a gain of $94.20, or 7.96%, as investors sought safety from volatility in global financial markets.

Also on the Comex, silver futures for March delivery declined 7.0 cents, or 0.41%, to trade at $17.13 a troy ounce. Silver rose 43.5 cents, or 2.59%, to end at $17.20 on Friday. Prices soared $1.47, or 10.31%, in January.

Elsewhere in metals trading, copper for March delivery tacked on 1.0 cent, or 0.41%, to trade at $2.505 a pound as investors shrugged of concerns over the health of China's economy.

Data released earlier showed that the final China HSBC Manufacturing Purchasing Managers' Index ticked down to 49.7 in January from a preliminary reading of 49.8. Analysts had expected the index to remain unchanged.

Over the weekend, government data showed that China's manufacturing purchasing managers' index slipped to a two-year low of 49.8 in January, below expectations for a reading of 50.2 and down from 50.1 in December.

The gauge contracted for the first time since September 2012, adding pressure on policymakers to stimulate a faltering economy.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

The red metal lost 33.1 cents, or 11.72%, in January as concerns over the global economic outlook and the impact on future demand prospects dampened the appeal of the commodity.