Gold gains on Ukraine unrest, weak Chinese output data

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Investing.com - Gold prices rose on Monday after escalating tensions in Ukraine coupled with a soft Chinese manufacturing barometer bolstered the yellow metal's safe-haven appeal.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at 1,309.60 a troy ounce during U.S. trading, up 0.51%, up from a session low of $1,299.70 and off a high of $1,315.70.

The June contract settled up 1.52% at $1,302.90 on Friday.

Futures were likely to find support at $1,275.20 a troy ounce, Friday's low, and resistance at $1,331.30, the high from April 14.

Gold prices rose earlier after a final reading of China's HSBC manufacturing purchasing managers' index came in at 48.1 April, down from a preliminary estimate of 48.3 and missing forecasts for an uptick to 48.4. A reading below 50 indicates a contraction.

The numbers bolstered gold's safe-harbor appeal, while geopolitical concerns in eastern Europe softened the dollar, which tends to trade inversely with the yellow metal.

In Ukraine, conflict between the government and pro-Russian separatists grew more widespread over the weekend, and fears that the U.S. will get dragged deeper into conflict and stifle recovery weakened the greenback.

Elsewhere, profit taking from Friday's upbeat jobs report took the steam out of the greenback as well, which added to gold's gains.

The dollar firmed last week after the Labor Department reported that the U.S. economy added 288,000 jobs in April, well above expectations for jobs growth of 210,000, while the unemployment rate dropped to a five-and-a-half year low of 6.3%.

Still, concerns that long-term unemployment will remain a problem for the U.S. economy tarnished the otherwise positive jobs report, as the headline jobless rate fell in part due to a drop in the labor force, a sign that many who have been out of work for a long time quit looking for jobs and thus are no longer considered part of the labor pool.

Capping gold's gains, however, was an upbeat report on the U.S. service sector.

In a report, the Institute of Supply Management said its non-manufacturing purchasing managers' index rose to a five-month high of 55.2 in April, from a reading of 53.1 in March, compared to expectations for a rise to 54.1.

Meanwhile, silver for July delivery was up 0.19% at $19.583 a troy ounce, while copper futures for July delivery were down 0.63% at $3.051 a pound.

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This article appears in: Investing , Forex and Currencies

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