NEW YORK/LONDON: Gold gained 1 percent on Monday, rising with commodities and equities on hopes that European Union leaders were making progress to tackle the region's debt crisis and signs of resiliency over China's domestic demand.
Bullion rose for a second day on optimism that the EU was nearing agreement on bank recapitalization and on how to leverage their rescue fund to stop bond market contagion. News that China's manufacturing sector grew in October also lifted gold as commodities led by copper and crude oil surged.
In recent weeks, gold has appeared to lose its usual safe-haven status, with bullion prices moving in tandem with riskier assets. Wild price swings have sent the precious metal about $300 off its record high set in early September.
"Gold has moved away from a more traditional safe haven to a risker asset, commodity-type play. And riskier assets are all trading in tandem right now with the Europe situation," David Meger, director of metals trading at futures broker Vision Financial Markets.
Spot gold was up 0.9 percent at $1,655.49 an ounce by 11:33 a.m. EDT (1533 GMT), following a 2 percent decline last week.
"Gold popped up this morning along with most of the commodities markets. The beginning of the EU debt resolution has had a strengthening effect on commodities and equities as a whole," said Credit Suisse analyst Tom Kendall.
Despite some progress over the weekend, final decisions from the EU leaders are deferred until a second summit on Wednesday and sharp differences remain over key issues related to Greece.
US gold futures for December delivery gained $21.10 to $1,657.20.
COMEX futures trading volume was thin during Monday's gains, similar to a weaker-than-usual trend during the last several weeks, suggesting bullion's rally may not hold
China's vast manufacturing sector picked up moderately in October, snapping a three-month contraction and underscoring the resilience of the world's second-largest economy backed by robust domestic demand. "The China PMI got the market fired up, with a lot of shorts covering as the data suggested that the slowdown in China may have peaked," said David Thurtell, a Citigroup analyst.
Among other precious metals, silver was 1.5 percent higher at $31.80 an ounce. Platinum rose 2.1 percent to $1,537.22 an ounce, while palladium climbed 3 percent to $629.95 an ounce.
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