Gold supported on weak US economic data - 30 Jan 2017

Commodity Intraday Tips

Gold futures were flat Friday, bouncing back from steep early losses after disappointing US economic data dented the dollar. Economic growth in the US slowed by more than anticipated in the final three months of 2016, according to a report released by the Commerce Department on Friday.

The Commerce Department said gross domestic product increased by 1.9 percent in the fourth quarter following a 3.5 percent jump in the third quarter. Economists had expected GDP to climb by 2.2 percent.

The Commerce Department said durable goods orders fell by 0.4 percent in December after tumbling by a revised 4.8 percent in November.

The data also cemented renewed expectations the Federal Reserve will delay raising interest rates for a few more months. The Fed meets next week. Feb. gold settled at $ 1,188.40 per ounce, down $ 1.40, or 0.1 percent.

Prices at one point touched a 10-week high but were down 1.4 percent for the week. MCX Gold futures ended around Rs 28,350 per 10 grams, down marginally on the day. Expect a sideways outing today with highs near Rs 28,600 triggering some resistance.

Indian Gold Demand is expected to come back to normal levels in next three years, according to a latest update from the World Gold Council (WGC).

The WGC said that they see demand in one of the world’s top gold-consuming nations rising by between 850 to 950 tonnes by 2020, on an improving economy and strong demographics. The optimistic report comes after a dismal 2016 with expectations that the country imported only 650 to 750 tonnes of gold, the lowest level since 2009.

However, the council said that 2017 could be another difficult year as the market faces growing headwinds from uncertain government regulations.

Any tightening in gold-related policies, such as the measures that have recently been implemented to regulate and formalize the gold industry, are disruptive and will stifle demand in the short to medium term.

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