London 02/04/2012 - Spot gold gained in Monday afternoon trade on better-than-expected US manufacturing data, although sluggish physical demand - Indian demand has slowed significantly - capped advances.

Spot gold was last up $12.57 at $1,680.87-1,681.76 per ounce, close to its intraday high of $1,683.75. The metal gained more than 6.5 percent in the first quarter of the year.

Resistance at the psychologically important $1,700 level is now in sight but trading is likely to be patchy and volatile in what is a short trading week for China and the West.

In US data, ISM manufacturing PMI came in at 53.4 points last month from 52.4 in February and above expectations of a 53.3 reading. A reading above 50 indicates economic expansion, underscoring hopes that the US recovery is gathering pace.

But US construction slowed, striking a note of caution. In any case, the market remains quiet ahead of more frontline data due later this week - US factory orders on Tuesday, ISM Non-Manufacturing on Wednesday and non-farm payrolls on Friday.

In wider markets, the euro was trading at a little changed 1.3310 against the US dollar, down from an intraday high of 1.3380.

In Asia, Indian gold merchants also extended their strike to a 17th day to protest against a government plan to double gold coin and bar duties to just above four percent.

“Jewellers are all closed here in major cities but they may open again tomorrow,” an India-based trader, said.

The president of the Bombay Bullion Association (BBA) reportedly confirmed that gold imports will remain weak over the coming months after March saw just 15/20 tonnes come in. Imports could total no more than 800 tonnes this year, down from 878 tonnes last year.

Turkish gold imports rose to almost three tonnes in March, treble the levels of the same month of last year and maintaining the trend since the start of this year, data from the Istanbul Gold Exchange (IGE) showed. 

Gold imports reached 2.909 tonnes last month, up from 0.9 tonnes in March 2011 and compared with 2.9 tonnes in January and two tonnes in February.

Among other precious metals, silver rose hit a two-week high of $33.25 earlier before falling slightly lower to $33.08-33.12. Platinum rose $10 to $1,648-1,657 per ounce, while palladium dropped 50 cents to $653-669 per ounce - the metal hit a 10-week low of $639.90 on Thursday.


(Additional reporting by Clara Denina, editing by Mark Shaw)

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