Gold rebounds from 6-week low on weak data in China

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Gold climbed 1 percent on Monday, buoyed by weak Chinese factory data and earlier dollar weakness, lifting prices above the prior session's six-week low, though caution over the timing of a U.S. interest rate hike kept prices hemmed within a narrow range.

Silver also jumped, to its highest level in nearly four weeks, as the dollar index gave up early gains to fall 0.1 percent. Trading across financial markets was thinned by a UK holiday on Monday, with London markets closed.

Spot gold was up 1.1 percent at $1,191 an ounce, off a high of $1,193, while U.S. gold futures for June delivery settled up $12.30 an ounce at $1,186.80.

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"We got some good news for gold coming out of China overnight; the drop in PMI lifted gold. The dollar's strong but gold is holding," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.

"We see technical improvement in gold precipitated from overnight news from China."

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China's factories suffered their fastest drop in activity in a year in April as new orders shrank, the HSBC/Markit Purchasing Managers' Index (PMI) showed, hardening the case for fresh stimulus measures to halt a slowdown in the world's second-largest economy.

On Friday, spot prices fell to $1,170.20 an ounce, the lowest since March 20, after the Federal Reserve indicated that it saw a recent slowdown in the U.S. economy as transitory and did not rule out an interest rate rise this year.