Gold futures headed higher Friday, after briefly taking dipping, following the first estimate of second-quarter U.S. gross domestic product, which indicated the economy was healthy but slowing and might still warrant an interest rate cut by the Federal Reserve.
August gold on Comex
GCQ19, +0.42%
added $5.70, or 0.4%, to trade at $1,420.40 an ounce, after the metal finished 0.6% lower on Thursday, marking its sharpest slide since July 5, according to FactSet data.
For the week, the precious commodity has shed 0.5% based on the settlement for the most-active contract on July 19.
Meanwhile, September silver
SIU19, +0.39%
added 0.5%, or 8 cents, to reach $16.50 an ounce, a day after marking its sharpest daily slump since July 5. Gold’s sister metal was looking at a weekly gain of 2%. Silver has been on a tear, on track to post three weeks of gains, including a 6.3% weekly rise last week.
GDP, the official report card on the economy, grew at a 2.1% annual pace from the start of April to the end of June, the government said Friday. Economic growth slowed from a 3.1% gain in the first three months of the year. Economists polled by MarketWatch had expected a 1.9% GDP reading.
Although, the reading was healthy, it did reveal some signs of weakness, particularly in business investment, amid the Sino-American tariff dispute, that might give the Fed cause to reduce borrowing cost at the conclusion of its two-day July 30-31 gathering next week, market participants said.
Notably, the report suggests that businesses will eventually cut jobs or reduce worker hours if growth doesn’t pick up.
“This morning’s GDP numbers and some of the other numbers suggest that the economy is not in imminent danger of slowing down, so I think that a quarter-of-a-percentage point” cut is likely, Peter Hug, global trading director at Kitco Metals Inc., told MarketWatch.
He said, however, that a “half-a-point cut is now off the table.”
On Thursday, markets retreated after the European Central Bank signaled that it plans to ease monetary policy. Although, the ECB was dovish some investors were disappointed that the central bank didn’t include immediate action or details of its likely efforts.
Still, metals experts say that gold’s uptrend remains in force because the ECB and Fed are likely to be reducing borrowing costs, providing a runway for gold to climb.
Source : MTV
