Forexpros – Last week saw gold futures surge to a fresh record high on Friday, as weaker-than-expected data on U.S. gross domestic product raised the prospect of further monetary easing, while ongoing sovereign debt concerns in the U.S. and the euro zone underlined the precious metal’s safe haven appeal.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,628.15 a troy ounce by close of trade on Friday, jumping 1.6% over the week, its fourth consecutive weekly gain.
It earlier rose to a record high of USD1,637.50 a troy ounce, eclipsing the previous high of USD1,629.85 a troy ounce it hit on Wednesday.
Gold prices gained 8.2% in July, the biggest monthly advance since November 2009 and have climbed to a record high in five of the past ten sessions.
The U.S. Commerce Department said on Friday that the economy grew at an annual rate of 1.3% in the second quarter, below expectations for growth of 1.7%. First quarter growth was revised sharply lower to 0.4% from 1.9%.
The disappointing data raised the specter of further quantitative easing and kept U.S. interest rate hikes far off in the distance.
Meanwhile, with the August 2 deadline just days away, U.S. Republican and Democratic leaders struggled to come up with a compromise that would allow them to raise the USD14.3 trillion debt ceiling.
Ratings agencies Moody’s, Standard & Poor’s and Fitch have said they will cut the U.S.’s top-level credit rating in the event that a failure to raise the debt ceiling results in a default.
The dollar index, which tracks the performance of the greenback against of six other major currencies, shed 0.33% on the week to settle at 73.98, hovering close to an 11-week low.
Gold prices often move inversely to the U.S. dollar, as gold becomes less expensive for buyers using other currencies.
Adding to the precious metal’s appeal, ratings agency Moody’s said Friday that it placed Spain’s Aa2 rating on review for possible downgrade, fuelling concerns over sovereign debt contagion in the single currency bloc.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Elsewhere on the Comex, silver for September delivery traded at USD39.90 a troy ounce by close of trade on Friday, dipping 0.45% over the week, while copper for September delivery added 1.55% on the week to trade at USD4.486 a pound.
In the week ahead, the dollar looks likely to remain under pressure as investors await progress on a deal to raise the debt ceiling, while Friday’s report on U.S. non-farm payrolls will also be in focus.
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