Gold eyes weekly gain as dollar dips ahead of U.S. GDP data

New York (April 26)  The metal, which reached its lowest since late December on Tuesday at $1,265.90, is up 0.4 percent so far this week, and is poised for its first weekly gain since March 22. U.S. gold futures edged up 0.3 percent to $1,282.30. The dollar retreated from 23-month highs ahead of the first-quarter gross domestic product (GDP) data due later in the day, while global shares eyed a fifth straight weekly gain despite subdued trade. "The moves in the forex market are favourable for the precious metals in general, with the euro firmer against the U.S. dollar and a slightly lower dollar index," Quantitative Commodity Research analyst Peter Fertig said.

"In addition, declining longer-term bond yields in the euro zone and the U.S. are also supporting as the opportunity cost of holding gold is declining," Fertig said. Even strong data out of the U.S. was unlikely to change the Federal Reserve's monetary strategy, he added.

According to a Reuters poll, major central banks are done tightening policy as the global growth outlook has softened across developed and emerging economies, with scant prospects for a surge in inflation. The view is supported by a recent slashing of its growth outlook by the Bank of Canada and a disclosure from the Bank of Japan that it will keep interest rates super-low for at least one more year. "Despite a significant drop in long-term real rates, gold prices have remained flat year-to-date as recession fears have receded since late last year," Goldman Sachs said in a note. Central bank gold purchases have been running strong this year, which could support prices, the bank said. While gold has fallen nearly 5 percent from a peak in February, bullion's recovery from this week's four-month low is painting a neutral picture in technical charts. Gold looks neutral in a $1,274-$1,284 range, and an escape could suggest a direction, said Reuters technical analyst Wang Tao. Among other precious metals, silver was up 0.4 percent at $14.99 per ounce and has gained 0.4 percent so far this week.

Platinum rose 0.9 percent to $890.44, while palladium was down 0.2 percent at $1,411.30 per ounce, on track for its first weekly drop in three.

Reuters