Gold flat as US GDP reading paints mixed picture

Otmane El Rhazi from The Bullion Desk.

The gold price was steady on Friday as the latest gross domestic product reading showed that the US economy grew at a solid if unspectacular rate in the fourth quarter.

Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down 20 cents at $1,209.90 per ounce. Trade has ranged from $1,204.10 to $1,212.20.

“Gold is trading largely unchanged as the week draws to a close,” Commerzbank said. “The sharp appreciation of the dollar, which climbed to a four-and-a-half week high against the euro, drove gold in euro terms to a ten-day high of 1,080 euros per ounce.”

“January saw the US inflation rate slide into negative territory for the first time since October 2009, raising real interest rates in the US as well as the opportunity costs of holding gold,” the broker added.

In data this morning, US GDP grew at a 2.2 percent annualised clip in the fourth quarter, revised down from the 2.6 percent pace estimated last month but slightly above the 2.1 percent forecast.

“We continue to wonder whether this slowdown is due to an economy returning to a more normalised pace of growth after the removal of the Federal Reserve’s liquidity punch bowl in October or if it points to inherent weakness,” said FastMarkets’ Tom Moore, who noted that the dollar has pushed higher on this release but the precious metals have not fallen, which is most probably due to the negative connotation of reduced growth.

In the wider-markets, the dollar is still strong at 1.1222 against the euro, while Germany’s DAX and France’s CAC-40 were up 0.13 percent and 0.25 percent respectively.

Elsewhere, German import prices at -0.8 percent were as expected, while French consumer spending at 0.6 percent beat the consensus -0.3 percent. The Italian preliminary CPI at 0.3 percent was better than the forecast 0.2 percent and the previous reading of -0.4 percent.

The German preliminary CPI is set for release while the Chicago PMI, pending home sales and the University of Michigan’s consumer sentiment and inflation reports are due from the US later.

As for the other precious metals, Comex silver for May delivery were down 12.9 cents at $16.495 per ounce. Trade has ranged from $16.425 to $16.675.

Platinum futures for April delivery on the Nymex were up $2.30 at $1,175.90 per ounce, while the most-actively traded palladium contract was at $808.40 per ounce, down $2.65.

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