New York 02/04/2012 - Comex gold erased earlier losses and moved into positive territory after a better-than-expected US manufacturing report indicated that the economic recovery continues to build up steam.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were last up $10.10 at $1,682.10 per ounce. Trade has ranged between $1,664.40 at $1,684.30.

Commodity prices rebounded soon after the Institute for Supply Management (ISM) said that US manufacturing PMI climbed to 53.4 last month from 52.4 in February and above expectations of a 53.3 reading. A reading above 50 indicates economic expansion.

“We saw some big run-ups in metal prices during the first quarter and now traders are looking for direction. The [ISM report] gave the bulls some hope that the positive market environment might carry over [to the second quarter],” a US-based fund manager said.

But the push higher has lacked a certain amount of conviction while investors still await US factory orders on Tuesday, ISM Non-Manufacturing on Wednesday and non-farm payrolls on Friday, the manager added.

In wider markets, the dollar was last about a third of a cent stronger at 1.3295 against the euro, while US equity markets were little changed.

Elsewhere, fears of a so-called hard landing in China were allayed somewhat after Chinese officials reported that the nation's PMI for March came in at 53.1, easily beating a forecast of 50.8 and above the 51.0 tally for the previous month.

In gold-specific news, the Comex net speculative length added 70.4 tonnes to 514.6 tonnes last week, which marks the first increase in four weeks, according to CFTC data.

This was the result of the addition of 49.9 tonnes in new speculative longs and the unwinding of 20.5 tonnes of shorts, CFTC added.

Meanwhile, Indian gold merchants extended their strike to a 17th day to protest against a government plan to double gold coin and bar duties to just above 4 percent. The country's gold demand reached 933.4 tonnes in 2011, making it the world's largest consumer, according to the World Gold Council.

Gold imports in the second quarter are expected to total 150 tonnes, down from 250 tonnes in the corresponding three months of 2011. For the full year, imports are forecast at 700-800 tonnes, a drop of as much as 25 percent, according to the Bombay Bullion Association (BBA).

As for the other precious metals, Comex silver for May delivery was last up 52.1 cents at $33.010 per ounce. Trade has ranged from $32.340 to $33.070.

Platinum for July delivery on Nymex was up $11.00 to $1,655.00 per ounce, while the June palladium contract was 4663.35, up $9.20.


(Editing by Mark Shaw)

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