NEW YORK (Reuters) - Gold prices edged up in thin trade on Thursday as slowing growth in China’s factory output raised hopes for more bullion-friendly monetary stimulus there from one of the world’s top economic engines.
The metal rose after China’s factory activity unexpectedly slowed in July to its weakest in more than three years, which leaves room for policymakers there to push for more stimulus to meet China’s annual 7.5 percent growth target.
Volume in U.S. gold futures, however, looked set to hit a fresh 2012 low as uncertainty over the timing and scope of any monetary action to be taken by the Federal Reserve and European Central Bank kept bullion investors on the sidelines.
“Gold and silver are a bit higher on expectation of more QE after the weaker Chinese data, and they are getting some technical buying as prices stay above $1,600,” said Phillip Streible, senior commodities broker at futures brokerage R.J. O‘Brien.
“You are going to need big volume to get the metal moving. The path of least resistance to the upside is going to need those stimulus measures to come true,” Streible said.
Investors looking for quantitative easing (QE) -- increasing money supply by buying government bonds to keep interest rates low -- were somewhat frustrated after the number of Americans filing new claims for jobless benefits fell last week and trade deficit dropped to the smallest in 1-1/2 years.
Spot gold inched up 0.2 percent at $1,614.13 an ounce by 12:32 p.m. EDT (1632 GMT).
U.S. COMEX gold futures for December delivery were up $1.10 an ounce at $1,617.10, with volume so far sharply below its 30-day average, preliminary Reuters showed.
A fall in Chinese consumer inflation to a 30-month low in July suggested the country’s central bank could follow up rate cuts in June and July to boost the economy.
Even though market speculation has grown in recent weeks over the prospect of U.S. and European easing, bullion investors remained unconvinced. Their doubts can be reflected by a very tight range $15 range this week between $1,602 and $1,617 an ounce.
Among other precious metals, silver edged up 0.3 percent at $28.07 an ounce, while spot platinum slipped 0.2 percent to $1,402.50 an ounce and spot palladium was up 0.1 percent at $582.60 an ounce.
Palladium remains the worst performer of the major precious metals this year, down around 10 percent compared with a 1 percent rise in silver and platinum and a 3 percent rise in gold. Both platinum and palladium have been hurt by concerns over demand from carmakers, the main users of the autocatalyst metals.
HSBC cut its price forecast for palladium to $655 an ounce in 2012 from $785. However, it said it still expects the metal to climb from current low levels due to lower Russian exports of palladium.
The bank also cut its price view on platinum to $1,525 an ounce in 2012. Prices at 12:32 p.m. EDT (1632 GMT)
Additional reporting by Jan Harvey in London; Editing by Bob Burgdorfer