Gold prices turn positive as dollar weakens
San Francisco (June 25) Gold futures turned positive on Wednesday as the dollar weakened on news that the U.S. economy shrunk much more than previously expected in the first quarter.
Gold for August delivery GCQ4 -0.08% tacked on $1.40, or 0.1%, to $1,322.70 an ounce on the Comex division of the New York Mercantile Exchange. The move comes after prices tallied a five-session gain of nearly 4%. July silver SIN4 +0.08% was last up 5 cents, or 0.3%, at $21.10 an ounce.
The sharp reaction was due in part to follow through from first-quarter GDP reading and durable goods order data for May falling by 1% filtering through to the currency and U.S. Treasury markets, said Jeffrey Wright, managing director at H.C. Wainwright.
The U.S. dollar DXY -0.15% weakened against the major currencies and along with a rise in Treasury prices, gold is responding upward, he said. “We still believe gold is range bound from $1,250 to $1,350 in 2014, just heading towards the upward band of the range over past week.”
Gold had pared some of their early losses shortly after the Wednesday release of weaker-than-expected U.S. economic data.
Durable-goods orders for May fell by 1% versus expectations for a 0.5% fall. Also, the Commerce Department made a larger-than-expected cut to its estimate of first-quarter gross domestic product, producing a 2.9% annualized contraction versus an earlier estimate of 1%.
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Gold saw a big move “on the back of the rotten GDP data which was released today,” said Naeem Aslam, chief market analyst at AvaTrade. Comex gold traded lower for the session, at around $1,315 before the GDP data and pared losses to tap $1,320 immediately after them.
But much of that earlier move was “short lived because bad weather is the major reason for this stinky number, and if such is the case and there is nothing big lingering under this, then we would expect a strong number for the next quarter — a payback time,” Aslam said.
Also among the key metals traded on Comex Wednesday, prices for copper continued to inch higher, with the July contract HGN4 +0.38% trading at nearly $3.17 a pound, up over a penny. July platinum PLN4 +0.04% climbed 70 cents, or 0.1%, to $1,472.60 an ounce, while Sept. PAU4 +0.15% tacked on $2.65, or 0.3%, to $833.05 an ounce.
Shares of gold and silver miners rebounded a bit from Tuesday’s decline, with the Philadelphia Gold and Silver Index XAU +0.76% gaining 1.3%. The SPDR Gold Trust GLD +0.10% saw its shares trade up 0.3%.
Source: MarketWatch
