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Gold inches up on weak economic data, but firm dollar caps gains

The US dollar, which traded close to a near two-year peak, kept the metal's gains in check by making it more expensive for holders of other currencies

Arijit Bose | Reuters 

Gold

prices edged up on Thursday as a dip in equities and weak economic data from far and wide raised flags about the pace of global economic growth, while a firm curbed further gains for the metal.

Spot rose 0.2 per cent to $1,277.72 per ounce at 0815 GMT. futures were steady at $1,279.60 an ounce.

Asian shares took a hit after data showed German business morale deteriorated in April as trade tensions hurt the industrial engine of Europe's largest

South Korean also unexpectedly contracted in the first quarter, fuelling concerns that the global is still not out of the woods.

"Global growth data outside the US have been actually quite poor, we haven't had anything to sink our teeth in," said Stephen Innes, head of trading and market strategy, SPI Asset Management.

"We have also anticipated some correction on the equity and that just turns the focus back to the major economic drivers," Innes added.

Gold is often used as a hedge against economic and financial uncertainties.

However, the US dollar, which traded close to a near two-year peak, kept the metal's gains in check by making it more expensive for holders of other currencies.

Having hit a four-month low of $1,265.90 an ounce earlier this week, the outlook for gold remains bearish in the near-term, with the metal still below its 50-day and 100-day moving averages.

"Heavy technical selling activities have imposed negative pressures on the precious metal for the near term," Benjamin Lu, analyst, Phillip Futures, said in a note.

"Market bears must break beneath $1,265 for a continuation of the negative trend scenario. A bearish breakthrough will see gold prices target the next main station of $1,245 in the coming term."

Attesting the bearish momentum, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, dipped 0.2 per cent to 747.87 tonnes on Wednesday, its lowest since Oct. 19. Holdings have fallen nearly 5 per cent so far this year.

Market participants will now shift focus towards the release of the US GDP data, which is due on Friday.

Investors also eyed further trade negotiations between the United States and China. The two countries are slated to begin the next round of talks on trade on April 30, in an attempt to conclude a nearly year-long tariff spat.

Elsewhere, silver rose 0.1 per cent to $14.93 an ounce, while platinum climbed 0.7 per cent to $884.79.

Palladium was steady at $1,416.67 an ounce.

First Published: Thu, April 25 2019. 15:32 IST
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