The gold price jumped to a seven-week high during Asian trading hours on Friday as the US dollar hit an eight-month low on Friday after slower-than-expected first quarter US GDP growth.
Spot gold was last at $1,275.80-1,276.10 per ounce on Friday, up $10 from Thursday’s close after jumping to a seven-week high of $1,280.90 earlier in the day. Trading ranged at $1,265.10-1,280.90 so far.
With the dollar testing recent lows again, gold prices are trying higher, said William Adams, head of research at FastMarkets.
“The charts look bullish, our medium-term outlook remains bullish, the gold/silver ratio is improving and the platinum/gold discount is shrinking, all of which suggests investor sentiment is becoming more bullish for precious metals. But we are nervous about how long the fund longs already are,” he said.
“We would not be surprised by a pullback but expect dips to be well supported,” he added.
The US dollar index sank to eight-month low of 93.43 on Friday – down 0.35 percent from its previous day’s close – after the US first quarter GDP announced on Thursday showed a 0.5-percent annual rate growth – its slowest pace since first quarter 2014 and below the 0.7-percent consensus estimate.
US unemployment claims, however, hit a 42-year low of 247,000, which easily beat the 257,000 forecast.
This contradiction of a strong jobs market with tepid GDP growth has put the Federal Reserve in a bind. In its April statement released yesterday, the Fed decided to maintain near-zero interest rates despite noting that global risks had eased over the last several weeks.
On Thursday, the Bank of Japan (BoJ) also surprised markets by deciding not to provide further stimulus, causing an initial dip in equity markets.
“We have now seen both the European Central Bank and the BoJ show a degree of reluctance to deliver further easing, despite ongoing inflation weakness and currency strength. Is it a sign that the significant and unprecedented monetary policy action globally is drawing to a close? It is too soon to tell of course. But if it is, then perhaps some of the distortions that these policies have created could also be about to dissipate,” said ANZ Research on Monday morning.
In data, a run of CPIs from the EU and the US are due alongside other numbers including the Chicago PMI are due later on Friday. The focus will then switch to Chinese manufacturing data set for release over the weekend.
In equities, the Shanghai Composite is so far down 0.4 percent to 2,933.77 on Friday.
In commodities, the Brent crude spot price rose 0.21 percent to $47.65 per barrel, while the Texas light sweet crude spot price gained 0.79 percent to $46.00 so far on Friday.
In other precious metals, silver rose $0.205 to $17.76/$17.78. Platinum increased $11 to $1,057/1,062, while palladium was up $7 to $625/631 recently on Friday.
On the Shanghai Futures Exchange, gold for June delivery was unchanged at 267.25 yuan per gram and June silver was flat at 3,850 yuan per kilogram.
(Additional reporting by Dalton Barker)
The post Gold jumps to seven-week high as US dollar continues to drop appeared first on The Bullion Desk.
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Source: Bullion Desk News
