Gold closed nearly 2% higher yesterday as world equities retreated after the release of disappointing manufacturing data out of the U.S. The Institute for Supply Management (ISM) factory activity report slipped from 56.5 to 51.3, its lowest level since May 2013.

The main U.S. stock market dropped by more than 2% and Japan’s Nikkei lost 4.2%, and at present all main European stock markets are in negative territory. Analysts expect the volatility in the equity markets to remain which in turn will be positive for gold in the short term.