Gold prices now sit at a six-week high as investors continue to pile into safe-haven assets.
December Comex gold was up $3.60, or 0.31%, at $1,157.70 in morning trading today (Friday). Gold prices rose as high as $1,116.70 earlier in the session.
Investors continue to pile into gold amid a sharp sell-off in global markets. Situations in both Greece and China have sent the markets into a tailspin this week. The Dow Jones Industrial Average has fallen more than 4.4% since Monday.
Another downbeat economic report came out of China on Friday. The preliminary Caixin China Manufacturing Purchasing Managers' Index for August was reported at 47.1 versus 47.8 in July. The reading now sits at a 77-month low. A number below 50.0 suggests contraction in the sector.
That helped send China's Shanghai Index tumbling another 4.3% on Friday. Japan's Nikkei stock index slumped 3.1%. Australia's main index fell 1.4%, and European markets were all firmly the red.
U.S. markets followed the trend. Just minutes after Wall Street's opening bell, the three major benchmarks were all lower by nearly 1% Friday.
Concerns about the economic health of China is a key driver of lower stock prices. Currency devaluations and a volatile stock market have investors all over the globe worried about the world's second-largest economy.
But that's not the only worry.
Uneven growth in the United States and the prospect of the U.S. Federal Reserve's first interest rate hike since June 2006 also have investors fleeing to precious metals.
Here's what we see for the future of gold prices now...
Interest Rates and Global Growth Move Gold Prices Now
Gold prices are projected to slip after the Fed's first hike. But after an initial slip, they should quickly recover.
The rebound in the gold price could be particularly pronounced if investors believe that Fed will take a long pause after raising rates.
Still, dismal reports like Friday's Purchasing Manager Index has investors divided on whether the Fed will raise interest rates soon.
The U.S. manufacturing sector came under pressure again Friday and continues to hang just above contraction level, according to the latest flash PMI data.
Private research firm Markit said today that its August PMI estimate fell to its lowest manufacturing reading since October 2013.
"With the headline PMI swiftly losing ground after a modest rebound during July, the latest figure now points to the weakest overall pace of manufacturing growth for almost two years," Tim Moore, senior economist at Markit, said in the report.
The data further fueled Friday's global equity rout that followed a sharp sell-off on Thursday.
The Dow Jones Industrial Average now trades at its lowest level since October 2014. According to FactSet, one out of four stocks in the S&P 500 are now in correction territory, down 20% or more from their 52-week high.
Those worries, coupled with mounting global economic woes, have sent investors to safe-haven gold. This week's gold price rally has also stocked renewed optimism in the precious metals markets.
Gold prices rose $24.90, or 2.21%, to $1,153 an ounce on Thursday.
With Friday's gains, the gold price has trimmed its year to date loss to a modest 2.31%.
China Targets the Gold Market: The Chinese government has a multi-pronged strategy to strengthen the Asian giant's economy. After years of playing second fiddle in the gold market to the Western economic powers in Europe and the United States, China is making moves toward a more influential role. Here's how China plans to dominate the world gold market...
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