Gold Near 1-Week High as Soft US Inflation Data Dents Dollar

Gold steadied on Monday, hovering near a more-than one week high touched in the previous session after the dollar fell as investors focused on soft US inflation data that overshadowed strong GDP numbers.

Fundamentals

Spot gold was steady at $1,285.59 per ounce at 0123 GMT, having hit its highest since April 16 at $1,288.59 in the previous session.

US gold futures were also firm at $1,287.70 an ounce.

The dollar fell against a basket of currencies on Friday to snap three days of gains, pressured by soft inflation data from the United States. Calm settled over Asian currency markets on Monday as Japan kicked off a week of holidays, giving investors an extra excuse to sit on their hands ahead of a Federal Reserve policy meeting and US jobs numbers.
Asian equity markets rose on Monday morning after an acceleration in US economic growth in the first quarter lifted the S&P 500 index to a record closing high, but less upbeat aspects of the US GDP report may limit the day’s upside.

US economic growth accelerated in the first quarter, but the burst in growth was driven by a smaller trade deficit and the largest accumulation of unsold merchandise since 2015, temporary boosters that are seen weighing on the economy later this year. Excluding trade, inventories and government spending, the US economy grew at only a 1.3 per cent rate in the first quarter, the slowest since the second quarter of 2013.

Hedge funds and money managers increased their bearish wagers on COMEX gold in the week to April 23, the US Commodity Futures Trading Commission (CFTC) said on Friday.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.16 per cent to 746.69 tonnes on Friday from 747.87 tonnes on Thursday.

Even as the lift from optimism over prospects for US-China trade detente shows signs of wearing off for the wider US stock market, upbeat sentiment around China’s economy could bolster shares of materials companies.