Gold gains on demand for protection as equities fall

London, May 23. Gold today rose after data showed China’s manufacturing contracted in May for the first time in seven months, boosting demand for the metal as a protection of wealth as equities fell. Gold gained 1.4 per cent to USD 1,390.20 an ounce and silver by 1.3 per cent to USD 22.59 an ounce. The preliminary reading for a Chinese Purchasing Managers’ Index missed analysts’ estimates and came in below the level of 50, indicating a contraction. Commodities and stocks tumbled, with Japanese equities falling the most since the aftermath of the Fukushima disaster two years ago. Bullion also gained as the US dollar declined. Gold jumped 2.8 per cent and fell 1.6 per cent yesterday after the Federal Reserve Chairman Ben Bernanke told lawmakers a premature withdrawal of stimulus could endanger economic recovery, while noting the pace of bond purchasing will be reduced if labour market improvement is sustainable. Some investors have been short-covering, or buying gold to close out bets on falling prices. Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, dropped to 1,020.07 metric tonnes, the lowest level since February 2009.