Gold Backs Down From GDP-Inspired Gain, Awaits FOMC
New York (Apr 30) Gold futures backed down from their earlier economic data-inspired highs, with the market now consolidating and marking time until a statement from the Federal Open Market Committee Wednesday afternoon.
As of 12:04 p.m. EDT, gold for June delivery was $3.30 lower at $1,293 per ounce on the Comex division of the New York Mercantile Exchange. July silver was down 30.8 cents to $19.23 an ounce.
The market made some swings so far in response to U.S. economic data, traders said.
Ahead of time, prices had an initially softer tone on expectations that an FOMC statement after a two-day meeting would show policy-makers would continue to taper the bond-buying program known as quantitative easing, said Dave Meger, director of metals trading with Vision Financial Markets.
The June futures then hit the session low of $1,284.90 around 10 minutes after a stronger-than-forecast private-sector employment report from ADP, which listed higher-than-forecast April jobs growth of 220,000. This added to ideas that Friday’s nonfarm payrolls report from the Labor Department will be strong, Meger said.
“However, quickly thereafter, we got a GDP number showing extremely low growth,” he continued. “We got a bounce off of the lows.”
In fact, five minutes after hitting the low for the day, prices shot to the session high of $1,297.50 after a report showing growth in U.S. gross domestic product was just 0.1% in the first quarter, the weakest performance in three years.
“Unfortunately, a lot of the core spending was accounted for by Obamacare, suggesting the report could have been weaker,” said Steve Scacalossi, head of sales for global metals with TD Securities.
The market since gave up some of its gains, with some pressure coming from a stronger-than-forecast rise in the Chicago Purchasing Managers Index to a 63 reading in April. Still, gold is in the upper half of the range for the day while waiting for a post-meeting statement from the FOMC Wednesday afternoon.
Since then, Meger described the market as “lingering” and oscillating back and forth as traders await an FOMC statement. In particular, he said, traders will watch to see if policy-makers say the economy is lagging or if they chalk up weak growth in the first quarter to an unusually harsh winter in much of the U.S.
