Investing.com - Gold prices gained solidly on Tuesday and copper jumped as a private manufacturing survey out of China aided sentiment and geopolitical tension was stoked over a tweet by President-elect Donald Trump warning North Korea on testing an intercontinental ballistic missile.
Gold for February delivery rose 0.49% to $1.157.35 a troy ounce on the Comex division of the New York Mercantile Exchange. Elsewhere in precious metals trading, silver gained 0.68% to $16.098 a troy ounce, while copper futures jumoed 1.36% to $2.541 a pound.
"North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won't happen!" Trump then chided China on trade and its diplomatic support to North Korea.
"China has been taking out massive amounts of money & wealth from the U.S. in totally one-sided trade, but won't help with North Korea. Nice!"
Earlier, the Caixin manufacturing PMI for December came in at 51.9, well above the expected 50.7 and a jump from 50.9 in November. At the weekend, data showed the official China PMI from the China Federation of Logistics and Purchasing and the National Bureau of Statistics fell to 51.4 in December, slightly weaker than expectations.
"A further rise in production at Chinese manufacturers supported the higher PMI reading in December. Notably, the rate of output growth accelerated to a 71-month high, with a number of panelists commenting on stronger underlying demand and new client wins," the Caixin data statement said.
"Data indicated that improved domestic demand was the key driver of new business growth, however, as new export sales were unchanged in December."
At the end of last year, gold prices slid on Friday as investors took profits at the end of a year which saw bullion prices rise around 9%, snapping three years of declines.
Gold prices soared in the first half of 2016 as the Federal Reserve remained cautious on raising interest rates and prices of the precious metal hit a two-year peak in July as Britain’s vote to exit the European Union spurred a flight to safety.
But gold prices fell almost 8% in November amid rising U.S. bond yields and a rally in stock markets on the back of expectations for ramped up fiscal spending under the incoming Trump administration.
Gold prices tumbled to 10-month lows on December 15 after the Fed hiked interest rates and signaled that it expects to raise rates more quickly than previously anticipated in 2017.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.
Both a strong dollar and higher interest rates are typically bearish for gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.