Gold Price At 6-Week High Following Tepid U.S. GDP Data

New York (July 28)  Gold prices are moderately up and scored another six-week high in early U.S. trading Friday, in the immediate aftermath of a slightly downbeat U.S. GDP report that did not quite meet market expectations. August Comex gold was last up $4.90 an ounce at $1,264.90. September Comex silver was last up $0.132 at $16.705 an ounce.

The U.S. second-quarter advance gross domestic product (GDP) report showed a rise of 2.6%, year-on-year. Forecasts were calling for GDP growth of 2.7% in 2Q, versus the first-quarter reading of up 1.4%. This report falls into the camp of the U.S. monetary policy doves that would rather see interest rates stay very low.

The U.S. dollar index is solidly lower in the wake of the GDP report, which is a bullish daily element for the precious metals. The dollar index hit a 13-month low on Thursday.

The other “outside market” sees Nymex crude oil futures slightly higher. Prices Thursday hit a six-week high. Friday’s U.S. rig count number could be a market-mover for oil. The recent rally in oil prices is also supportive for the metals markets.

Global stock markets were mostly weaker overnight. U.S. stock indexes are also pointed to lower openings when the New York day session begins. The near-term technical postures for the U.S. stock indexes are starting to deteriorate. Bearish weekly low closes on Friday would begin to suggest the indexes have put in near-term tops. This is important for the precious metals markets because if the equities indexes start to trend lower, money flows would likely move from paper assets (stocks) and into hard assets like the precious metals

In overnight news, the Eurozone economic sentiment index for July came in at 111.2 versus 111.1 in June. The July reading is a 10-year high. The report helped support gains in the Euro currency, which on Thursday hit a two-year high.

Other U.S. economic data due for release Friday includes the employment cost index and the University of Michigan consumer sentiment survey.

KitcoNews