Disappointing manufacturing data from China raised the prospect of central banks taking action to juice-up economic growth, boosting sentiment towards oil and gold.
The Markit-compiled HSBC China manufacturing sector purchasing managers´ index (PMI) for the month of August was 47.6, down from 49.3 in July, marking a tenth successive month-on-month deterioration and confounding expectations of an impending stabilization. The August PMI reading is the lowest since March 2009.
The picture was not a lot better in the Eurozone, where the final PMI manufacturing indicator came in at 45.1 points compared to 44.0 in the previous month, marking the thirteenth consecutive month below the 50-point benchmark, which signals contraction in the sector.
"The final reading of the August PMI confirms that the Eurozone manufacturing sector remains firmly in contraction territory. The rate of decline was a little slower than in July, providing some heart that the manufacturing downturn may be easing, but the sector is on course to act as a drag on gross domestic product in the third quarter," said Markit Economics' senior economist Rob Robson.
The price of oil edged up in screen-based trading on the New York Mercantile Exchange (NYMEX); West Texas light sweet crude for October delivery rose 58 cents to $97.05 a barrel, having risen as high as $97.30 at one point, its highest intra-day level since August 27th. Open outcry trading in New York did not take place because of the Labour Day holiday in the US, while screen based trading ended early at 13:15, without an official settlement price.
Brent crude for September delivery rose $1.21 to $115.78 in London trading on the Intercontinental Exchange (ICE).
Gold was also in demand as traders took a punt on the US Federal Reserve launching another bout of quantitative easing (QE). The December futures contract rose $9.60 to $1,697.20 in screen-based trading on the NYMEX.
If the Fed does launch QE3 - the third phase of QE - then that raises the risk of increased inflation, and gold is traditionally seen as a reliable hedge against inflation. The price of the yellow stuff rose for the third month in succession in August, and notched up its biggest monthly gain since January of this year.
Another factor adding to demand for gold was the worsening situation in the mining industry in South Africa. Security guards at a gold mine part-owned by Nelson Mandela's grandson have shot and injured four miners taking part in a pay dispute.
Miners at the gold mine, in which both President Jacob Zuma's nephew, Khulubuse, and Nelson Mandela's grandson, Zondwa, have a stake, have been involved in a long running dispute over pay. A police spokesman said security guards had fired rubber bullets to break up a fight between striking and non-striking workers at the Gold One mine, which was previously known as Aurora. The incident follows the bloody protest at Lonmin's Marikana project, which led to the death of 34 miners.
Industrial relations in the South African mining sector are on a knife edge. Last week militant youth leader Julius Malema addressed miners at the Gold One mine, telling them to make it "ungovernable" until the company caved into pay demands.
Work at Lonmin's project has been at a standstill for three weeks after a pay dispute turned violent, culminating in a bloody showdown with police. However, there were reports on Monday that the company's management had agreed a provisional deal on wages. South Africa's Labour minister Mildred Oliphant said Lonmin's bosses and miners had agreed in principle to sign a two-year wage agreement, but one union was quick to pour cold water on the news, saying there was no guarantee the 3,000 workers on strike would give up the action.
"I don't share the same optimism," said Gideon du Plessis of the Solidarity trade union. "The workers have made it clear that they will not go back to work until such time that their wage demands are met."
Lonmin's workers are demanding a monthly salary of R12,500 - around £950 and double what they earn at the moment.
The price of platinum rose by a little less than $14 to $1,542.90 an ounce, close to its highest level since the early days of May.