MADRID -- Gold futures were set to finish the week around 5% higher, after the precious metal saw its biggest rally of the year the prior day, lifted further by news the U.S. economy grew by less than expected in the first quarter.
Gold for June delivery GCM3 +1.09% gained $7.50, or 0.5%, to $1,469.30 an ounce on Comex division of the New York Mercantile Exchange. Read: Big banks cut gold forecasts, but stampede slows
Tracking most-active contracts, gold futures are poised for a weekly rise of 5.3%, marking the metal’s first weekly gain in five weeks. Thursday’s session was a standout, with the June contract jumping $38.30, or 2.7%, to $1,462 an ounce. The one-day gain was the biggest since June on a percentage basis, and the largest since September on a dollar basis, according to FactSet data.
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“The prospect of emerging-market central bank buying and strong physical demand has put a bid in the market and reminded everyone that it’s not all about speculators,” IG chief market strategist Chris Weston wrote to clients.
A weaker U.S. dollar has also helped gold prices rise after a massive selloff that’s left them down by more than 8% this month. A weaker dollar tends to boost dollar-denominated prices for gold and other commodities.
The dollar DXY -0.38% on Friday continued to track lower against key rivals after first-quarter gross domestic product grewan annualized 2.5%, falling short of expectations. The ICE dollar index slipped to 82.528 from 82.813 late Thursday.
Analysts have said prospects for easier monetary policies have contributed to gold’s gains in recent sessions. Economists this week boosted the odds of an interest-rate cut by the European Central Bank at its May 2 meeting in the wake of weak manufacturing activity reports in Europe.
“We feel there are still upside risks in the short term,” said IG’s Weston, “but given trend and momentum indicators are still painting a negative outlook, we’d think about shorts around $1,503 (the 31.8% retracement of the October to April selloff), with stops at $1,560.”
In the broader metals complex, May silver SIK3 +0.91% traded 14 cents lower at $24 an ounce. On Thursday, silver leapt 5.7% to $24.14 an ounce, its highest close in nearly two weeks.
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