Investing.com - Gold prices rose on Monday after a widely-watched U.S. factory barometer missed expectations and sent investors rethinking how quickly the Federal Reserve will scale back monetary stimulus tools that weaken the dollar to spur recovery.
Gold and the greenback tend to trade inversely with one another, and Fed stimulus tools such as bond purchases tend to bolster the yellow metal's appeal as a hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,258.60 a troy ounce during U.S. trading, up 1.52%, up from a session low of USD1,240.60 and off a high of 1,266.10.
The April contract settled down 0.22% at USD1,239.80 on Friday.
Futures were likely to find support at USD1,240.60 a troy ounce, the earlier low, and resistance at USD1,270.10, Wednesday's high.
The dollar softened after the Institute for Supply Management said its manufacturing index fell to a seven-month low in January, as new orders slumped.
The ISM’s manufacturing purchasing managers’ index came in at 51.3 in January, down from 57.0 in December.
Analysts were expecting the index to inch down to 56.4 in January.
The report added new order growth fell at its fastest rate in 33 years, with the new orders index dropping to 51.2 from 64.4 in December. The employment index fell from 55.8 in December to 52.3, the weakest since June.
Also on Monday, U.K.-based Markit Economics reported that its U.S. manufacturing PMI came in at a three-month low of 53.7 for January, missing expectations for a 53.8 reading.
The soft numbers reminded investors that the Federal Reserve will trim its USD65 billion monthly bond-buying program on a gradual basis, and won't tighten policy anytime in the foreseeable future.
Meanwhile, silver for March delivery was up 1.45% and trading at USD19.398 a troy ounce, while copper futures for March delivery were down 0.38% and trading at USD3.185 a pound.