September 23, 2019 / 3:46 PM / 24 days ago

PRECIOUS-Gold hits 2-week high on growth fears, palladium scales new peak

* Palladium surges to record at $1,664.50/oz

* Gold could climb further to $1,550 -analyst

* Silver jumps more than 3%

* French, German and euro zone PMIs weaker-than-expected (Updates prices)

By Sumita Layek

Sept 23 (Reuters) - Gold rose on Monday to its highest in over two weeks as weak economic data from the euro zone stoked global recession fears and forced investors to seek refuge in bullion, while palladium soared to a record on a sustained supply shortfall.

Spot gold gained 0.5% at $1,523.51 per ounce as of 1:37 p.m. EDT (1737 GMT), after hitting $1,526.80, its highest since Sept. 6.

U.S. gold futures settled up 1.1% at $1,531.50 an ounce.

“The weak German PMI numbers gave a little bit of a shock to the stock market and led investors into safety like gold and silver,” said Phillip Streible, senior commodities strategist at RJO Futures.

Gold could hit $1,550 in this supportive environment of “weak interest rates, increasing geopolitical risks, no (trade) agreement with China and weak data that shows we are slipping into recession,” Streible added.

German private sector activity shrank for the first time in 6-1/2 years in September as a manufacturing recession deepened unexpectedly and growth in the service sector lost momentum, while euro zone business growth stalled, a survey showed on Monday.

Meanwhile, better-than-expected U.S. manufacturing PMI data helped stock markets pare some losses, but failed to dent gold’s upward momentum.

Investors are also keeping a close eye on U.S.-China trade ties, after a Chinese agriculture delegation cancelled their visit to U.S. farm states, adding to the uncertainty in the drawn-out dispute that has weighed on the global economy.

Adding to geopolitical tensions, U.S. President Donald Trump on Friday approved sending American troops to bolster Saudi Arabia’s air and missile defenses after the largest-ever attack on the kingdom’s oil facilities.

Meanwhile, palladium prices rose 0.6% to $1,650.60 an ounce, having soared to a record high of $1,664.50 earlier. The autocatalyst metal has risen nearly 8%, or about $115, so far this month.

“People are starting to realize that auto sales and production outside of China is actually not so bad and so demand from the industrial sector is stronger that what people thought,” said Jeffrey Christian, managing partner of CPM Group.

“In addition to that, there are a lot of investors moving in that market and in such a small, illiquid market, it doesn’t take a lot of investors to drive the price higher.”

Silver jumped 3.5% to $18.61 per ounce and platinum rose 1.1% to $955.85. (Reporting by Sumita Layek in Bengaluru Editing by Chris Reese and Marguerita Choy)

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