NEW YORK: Gold rose as stronger Chinese manufacturing activity boosted its inflation-hedge appeal, but bullion’s gains looked vulnerable as a better global economy and the US Federal Reserve’s planned scaling back of its stimulus program should weigh down prices.

Renewed labor unrest in South Africa, the world’s top platinum producer and a major supplier of palladium, sent platinum group metals prices sharply higher.

Bullion trade was choppy in below-average volume after data showed that US jobless claims last week held near a six-year low and US manufacturing activity rose this month, suggesting the economy is starting to find firmer footing.

China’s Purchasing Managers’ Index (PMI), a closely watched survey of the country’s manufacturers, showed that efforts by the world’s second-largest economy to halt a slide in economic growth might be paying off.

“China’s PMI came in positive. And all the data around the world, not just in the US, is pointing toward improvement,” said Carlos Sanchez, director of commodities and asset management at CPM Group.

“I am a bit surprised gold holds up so well with the Fed set to begin to taper later this year. Tapering would not be supportive of commodities and gold.”

Spot gold rose 0.3 percent to $1,370.52 an ounce by 1:27 p.m. EDT (1727 GMT), having earlier risen as much as 1 percent.

US gold futures for December delivery were up 40 cents an ounce at $1,371, with trading volume at around 30 percent below its 30-day average, preliminary Reuters data showed.

On Wednesday, gold ended lower after seesawing, as the latest Fed minutes provided few clues about the timing of the US central bank’s tapering. A sharp rise in US Treasury yields, seen as a gauge of interest rates, weighed down on precious metals and equities across the board.

Expectations the Fed’s $85 billion monthly bond-buying program, which helps support gold by maintaining pressure on interest rates while stoking inflation fears, could be reined in as early as September has helped knock gold prices down by nearly a fifth this year.

Jitters over precious metal supplies are also rising in South Africa, the source of three out of four ounces of the world’s platinum and the world’s sixth largest gold producer.

South Africa’s labor unrest widened as tens of thousands of construction workers prepared to down tools next week and unions in the gold sector also signaled their intention to call a strike over wages.

Platinum rose 1.7 percent to $1,532.24 an ounce, while palladium gained 1.5 percent to $752.50 an ounce.

Switzerland remained a net importer of platinum for a second month in July, data from the Swiss customs bureau showed, although shipments both into and out of the country dropped from the previous month.

Silver XAG= was up 0.7 percent to $23 an ounce. Prices at 1:27 p.m. EDT (1727 GMT).