New York 27/04/2012 – Gold futures inched into positive territory on Friday after a disappointing first-quarter US GDP figure caused the dollar to slide.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last up $3.00 at $1,663.70 per ounce. Trade has ranged from $1,651.10 to $16,65.40.
“We’re still in the same range but [gold] did rise a little after the Spanish downgrade worked through [the system] and people started looking at the US data as New York opened,” a US-based gold trader said.
Spanish sovereign debt was downgraded by ratings agency Standard & Poor’s overnight to BBB+ from A with a negative outlook. Adding insult to injury, the struggling country’s unemployment rate climb edto 24.44 percent in the first quarter, the highest in the eurozone.
“This credit rating downgrade is conclusive proof, if it wasn’t already obvious beforehand, that the sovereign-debt crisis in the eurozone has flared up again good and proper,” Commerzbank AG said in a note.
“Because this increases risk aversion and uncertainty among market players, risky asset classes are likely to come under pressure again. And since gold continues to display a high degree of correlation with commodities and equities, the yellow metal is also likely to suffer as a result,” its added.
But then the Commerce Department reported that the economy here expanded at an annual rate of just 2.2 percent in the first quarter, below the 3.0-percent gain in the last quarter of 2011 and below expectations of 2.6 percent. Consumer spending did increase at an annual rate of 2.9 percent in the first quarter, however, the strongest rise since the fourth quarter of 2010.
In wider markets, the dollar gave back earlier gains and was last down about three-quarters of a cent at 1.3254 against the euro, while the Dow Jones industrial average and S&P 500 opened 0.16 percent and 0.12 percent higher respectively.
“Gold remains range-bound, running into strong resistance yesterday above $1,660. The key will be whether a break above this level is achieved, with the next obvious target $1,700,” Standard Bank said.
“Looking ahead to next week, it will be interesting to see whether, with China closed for Monday and Tuesday and Japan closed for Monday, any technical momentum can build amid what will likely be pretty choppy conditions,” it added.
In the other precious metals, Comex silver for July delivery was up 9.9 cents at $31.375 per ounce. Trade has ranged from $30.945 to $31.420.
Platinum futures for June delivery on Nymex were up $4.60 at $1,574.80 per ounce, while the June palladium contract was at $677.10, an increase of $4.45.
By Tom Jennemann, Correspondent firstname.lastname@example.org