Gold companies rallied after gold prices climbed as US Treasury yields, US dollar faced selling pressure on weak PMI data

 

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Shares of Chinese gold mining companies stage a strong rally on Thursday. In the A-shares market, an index tracking the sector compiled by Wind Information surged by 3.8%, making it one of the best-performing sectors on the day.

In Hong Kong, China Gold International surged more than 6%, Zhaojin Mining jumping more than 5%, ZIjin Mining up more than 3%. 

The rally came after gold price recovered confidently as the US Dollar and Treasury yields faced selling pressure after S&P Global reported weak preliminary PMI data for August.

The preliminary Manufacturing PMI came in at 47.0, underperforming expectations of 49.3 and July’s reading of 49.0. The Services PMI decreased to 51.0 against estimates of 52.2 and the former release of 52.3. Weak PMI figures signal the hit of tight monetary policy by the Federal Reserve on the economy.

Investors remain worried about the financials of US firms as rising interest rates and higher inflationary pressures force them to scale down their operating capacity in accordance with a deteriorating demand environment. If this situation persists, labor market conditions are likely to deteriorate.

The US dollar slipped sharply to near 103.60 after facing stiff resistance near 104.00. Meanwhile, 10-year US Treasury yields plunged to near 4.20%.