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Gold weaker, copper down as July China PMI final falls


on – Gold and silver fell in early Asia on Monday and reversed early gains after China PMI final data for July came in weaker than expected.

The manufacturing PMIs from Japan, seen at 51.4 in July, came in at 51.2 and for China, the Caixin/Markit final for July dropped to 47.8, well below the 48.3 in the flash estimate. The Australian economy is highly dependent on exports to China.

Gold for August delivery on the Comex division of the New York Mercantile Exchange fell 0.12% to $1,093.90 a troy ounce.

Also on the Comex, for September delivery eased 0.34% to $14.695 a troy ounce by close of trade.

Elsewhere in metals trading, copper for September delivery eased 0.15% to $2.349 a pound.

Market players are watching the PMI amid concern that further sharp drops in China's stock market could spread to other parts of the economy, triggering fears that the Asian nation's demand for the industrial metal will decline.

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

Last week, inched up modestly on Friday, but still posted the worst monthly performance in more than two years in July, as ongoing expectations that the Federal Reserve will hike interest rates at its September policy meeting weighed.

In July, gold prices lost $79.50, or 6.72%, the biggest weekly decline since June 2013. Futures fell to a five-and-a-half year low of $1,072.30 on July 24.

Gold has been under heavy selling pressure in recent weeks amid speculation the Fed will raise interest rates for the first time in nine years in the coming months.

The central bank sounded more upbeat about the economy following its policy meeting last week, leaving the door open for an interest-rate hike as soon as September.

In its rate statement published Wednesday, the Fed described the economy as expanding “moderately,” while upgrading its view of the labor and housing markets.

The central bank gave no clear indication of the timing of the next rate hike, but left itself room to act as early as September, citing “solid” gains in the job market and “additional” improvement in the housing sector.

The Commerce Department said on Thursday that the economy grew 2.3% in the second quarter, missing expectations for growth of 2.6%, but improving from growth of 0.6% in the preceding quarter.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

In the week ahead, investors will be focusing on Friday's non-farm payrolls report for
July, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

On Monday, the U.K. is to publish its manufacturing index.

The U.S. is to release data on personal income and expenditure, while the Institute of Supply Management is to release data on manufacturing activity.

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