Forexpros – Gold prices rose in U.S. trading on Friday after soft Chinese trade data and downward revisions to European growth forecasts fueled sentiment that central banks around the world will intervene and stimulate their economies.
Stimulus tools tend to weaken paper currencies, the dollar especially if the Federal Reserve intervenes, which would send the precious metal gaining.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery were up 0.26% and trading at USD1,620.25 a troy ounce, up from a session low of USD1,606.35 and down from a high of USD1,626.85 a troy ounce early during the session.
Gold futures were likely to test support at USD1,606.35 a troy ounce, the earlier low, and resistance at USD1,626.85, the earlier high.
China reported earlier that its trade surplus narrowed unexpectedly in July, dropping to USD25.1 billion from a USD31.7 billion surplus.
Economists were expecting a USD35.1 billion surplus.
Soft demand for Chinese exports sent shudders across markets worldwide on fears the global economy may be battling stronger headwinds than once thought.
Meanwhile in Europe, the European Central Bank on Thursday trimmed its forecast for economic growth to 0.6% in 2013, down from 1% previously.
The ECB also forecast a 0.3% contraction in growth this year, slightly worse than its previous forecast for a 0.2% contraction.
The news cemented views that central banks around the world will take steps to stimulate their respective economies with monetary policy tools, which tend to weaken safe-haven currencies like the dollar and send higher-yielding currencies and stocks rising.
Federal Reserve officials have said they cannot rule out rolling out a third round of asset purchases from banks, a stimulus tool known as quantitative easing that pumps liquidity into the economy to spur recovery, weakening the greenback in the process.
The Federal Reserve has said it stands prepared to intervene while European Central Bank President Mario Draghi has said monetary policy officials will do whatever it takes to bolster the economy.
Elsewhere on the Comex, silver for September delivery was down 0.17% and trading at USD28.048 a troy ounce, while copper for September delivery was down 0.95% and trading at USD3.392 a pound.
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