Gold has reacted positively to recent US economic data released on Thursday as investors are getting back to the metal as a safe haven.
The dollar index, as a matter of context, is flat on Thursday as investors are in consolidation mode after three days of gains. So, mixed GDP data in the US, stabilizing yields and trade war maintain the risk aversion on the market with dollar and even cryptocurrencies getting more appeal as safe havens than the dollar.
As SP Angel analyst Sergey Raevskiy said to CNBC, “a strong dollar is weighing on the gold prices. The dollar has been strong lately; it seems like investors prefer to hold US debts and other low risk serving bonds as opposed to gold.” That’s why the dollar move is not that large on the broader picture.
Silver is advancing for the second day as it is proving 14.30 as a reliable support. XAG/USD is now trading above 14.40.
Copper lost the 2.650 area after breaking it earlier in the day. The mineral is now trading at 2.6340, its lowest level since January 24.
Palladium is trading flat on Thursday as the pair remains in range between 1,330 and 1,360. Platinum, on the other hand, is falling for the third day in a row as the pair is extending losses beyond the 800.00 area. It is now trading at 790.00.
US reports mixed economic data
The US annualized Gross Domestic Product for the first quarter of 2019 was revised down to 3.1% from 3.2% as expected. Quarter on quarter, the US GDP rose just 0.5% in the Q1 regarding the last quarter of 2018. The number was below expectations of a 0.6% quarterly increase.
Initial jobless claims reported an increase to 215K in the week of May 24 from the posted 212K in the previous week. The number was in line with the expectation.
Wholesale inventories in the United States rose 0.7% in March, more than the 0.2% expected by market and well above the 0.1% decline performed in the previous month.
Gold jumps after US GDP and recovers previous drop
Gold is currently trading positive in the short term as investors decided to buy the metal following the economic data released in the United States. The unit is now testing the 1,280 area.
Previously, XAU/USD dropped to 1,275 where the pair found support. Then, it started sideways movements that after the GDP got into a full recovery stance. The pair is now trading 0.10% positive on the day as it is trading at 1,281.
According to FX Empire James Hyerczyk, gold investors should watch the Euro as it is trading near 2-year lows. “If the Euro plunges then the dollar index could spike higher. This could drive gold prices sharply lower.”
Technical conditions in the daily chart suggest that the pair is still depressed and looking to the south but the 1,280 area is acting as a magnet to the metal. However, if gold fails at 1,280 or even at 1,290, it will get back to the 1,270 region and then the 1,266 support.