Increased demand prompted by weak U.S. gross domestic product data from the first quarter of the year prompted gold futures to surge on Friday as the yellowish metal barreled toward achieving its biggest weekly gain in about two years, according to Bloomberg.
Despite forecasts for GDP growth from January through March of more than 3 percent, the largest economy checked in at 2.5 percent, according to data released on Friday by the U.S. Commerce Department. Demand surged for the precious metal in China, a top consumer of gold, and Dubai, according to currency and metal trading head Bernard Sin with bullion refiner MKS in Geneva.
"Gold moved up in response to the weaker-than-expected U.S. growth showing that the safe-haven buying is back," senior market strategist Adam Klopfenstein with Archer Financial Services Inc. in Chicago told the news source on Friday. "Also, the physical demand continues to remain strong."
At 12:32 p.m. on Friday, gold futures fell 0.97 percent, a $15.01 loss to $1,453.60 per troy ounce.
First weekly advance since mid-March
Gold was driving toward its first weekly advance in five weeks, Bloomberg reports.
The precious metal also was pushing toward its largest climb since the beginning of the first quarter of 2011.
The performance of gold futures on Friday is notable because of its rough recent performance. On April 15, gold endured its sharpest one-day dive in about 33 years when plunging 9.3 percent. The metal had dropped into a bear market three days earlier.
"It seems as if the pullback is over for now," the senior market strategist told the news source.
China chimes in
As the globe's second-largest consumer of the yellowish metal, China is set to take three days off to observe May Day, Reuters reports. The Asian nation trails only India for global consumption of gold.
That 72-hour absence is forecast to pull back notable physical support from the market for the yellowish metal.
"This has been pretty much a physical-driven market for the past few days, and with Chinese players being on holiday next week, the market is looking at some reduction in demand and I guess on the back of that you have a bit of profit-taking at the moment," trading head Afshin Nabavi with MKS told Reuters on Friday.
The trading head noted gold might even be pushing toward the achievement of a particular milestone price.
"The market rallied quite strongly yesterday and we thought we would see some easiness in the physical market, which hasn't been the case and there still seems to be some tightness, which puts the $1,500 level on the cards," Nabavi told the news source.
Downward drop explained
Friday's performance of gold futures also included a sharp drop that MarketWatch reports is linked with profit taking as the weekend looms.
At points earlier during the trading session, gold futures benefited from the tepid GDP data. That spurt was roughly $10 higher, which occurred during a 10-minute period.
Independent gold analyst Chintan Karnani in New Delhi, India, told the news source that a bevy of inquiries came into his offices for people inquiring about the sudden drop.
"The only reason is profit taking before the weekend and failure to break past an intraday high of $1,484.80," the independent analyst told MarketWatch on Friday. "This fall has scared traders and they will be using every rise to exit gold buys."
Demand for gold also manifested in the U.S. as the U.S. Mint put off sales of some gold coins earlier this week because of how strong that demand was, MarketWatch reports.
The record price for gold futures is $1,923.70 per troy ounce as established in September 2011.
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