Forexpros – Gold prices held onto Friday’s gains albeit in choppy trading on Monday as investors braced for more volatility stemming from last week’s disappointing economic growth figures in the U.S. coupled with increasing uncertainty out of Europe.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded down 0.03% at USD1,664.25 a troy ounce.
Gold traded at a low of USD1,663.05 a troy ounce and hit a high of USD1,665.65 a troy ounce during the session.
The precious metal sought to test support at USD1,643.15 a troy ounce, the low of April 26, and resistance at USD1,679.15, the high on April 13.
Gold serves as a hedge against weakening paper currencies and uncertainty, and weak U.S. data continued to cloud outlook for the dollar on Monday.
The U.S. Commerce Department on Friday reported the country’s gross domestic product grew 2.2% in the first quarter, below estimates for a 2.5% gain.
Despite improving consumer demand, reduced government spending and business investment cut into growth.
Meanwhile, the Thomson Reuters/University of Michigan’s consumer sentiment index hit 76.4 in April, beating expectations for a 75.7 reading.
Still, sluggish economic growth figures last week continued to stoke fears on Monday that the Federal Reserve will stimulate the economy via monetary easing, which sent the dollar falling and the yellow metal rising.
A decision by the Standard & Poor’s ratings agency to downgrade Spain, the second such move this year, continued to fuel talk on Monday that like the Fed, European Central Bank officials will resort to monetary easing to fuel growth as well.
Meanwhile, in Japan, easing is underway.
The Bank of Japan expanded its plan for government-bond purchases by JPY10 trillion to halt the currency’s weakening trend as expected.
The U.S. is preparing for a string of corporate earnings this week, and hopes they will continue to surprise on the upside as they have this earnings season kept gold’s gains at bay.
Elsewhere on the Comex, silver for July delivery was down 0.24% and trading at USD31.335 a troy ounce, while copper for July delivery was down 0.09% and trading at USD3.834 a pound.
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