Investing.com -- Gold prices rebounded on Tuesday after a round of weak manufacturing surveys from around the world stoked fresh expectations of interest rate cuts from central banks.
However, prices still remained clearly below the $1,500 mark that had been the market's benchmark for the last few weeks. With net speculative positions near record highs, it's getting harder for bullish news to generate sharp upward movements.
By 11:20 AM ET (1120 GMT) gold futures for delivery on the Comex exchange were up 1.2% at $1,490.65 a troy ounce, up from an overnight low of $1,465.05 that was the lowest mark in nearly two months.
Spot gold was up 0.8% at $1,483.87 an ounce. Silver futures also rebounded, gaining 2.1% to $17.35 an ounce, while platinum futures fell another 0.2% to $887.75. They've now lost over 11% in the last month as traders have switched into palladium, riding a wave of industrial demand for catalytic converters from the auto industry. That's being caused by tighter emissions standards in China, and by the shift back from diesel to gasoline motors in Europe.
Gold's rebound was driven overwhelmingly by a shocking manufacturing survey from the Institute of Supply Management. Its index of activity in the sector fell to a 10-year low of 47.8, defying a consensus forecast for a rebound above the 50 level that separates contraction from expansion.
The report "points to further weakening in manufacturing & industrial output going into 2020," tweeted Greg Daco, U.S. economist for Oxford Economics.
As such, the figures suggest the U.S. is failing to avoid being sucked into a global slowdown that has been widely blamed on the trade dispute between the U.S. and China, and on fears surrounding Brexit. The latter flared again as U.K. Prime Minister Boris Johnson's plans for striking a last-minute deal with the EU to avoid a disorderly rupture were met with skepticism in Brussels and elsewhere.
Two-year Treasury bond yields, a rough proxy for short-term interest rate expectations, fell 10 basis points on the news to 1.55%, their lowest in over three weeks. Lower bond yields are generally supportive for gold prices, since its improves the relative return calculation for the yellow metal.