March 01, 2019
Gold hits 2 week low as upbeat U.S. data lifts dollar
(Reuters) - Gold prices hit a two-week low on Friday as upbeat U.S. economic data boosted the dollar, while mounting concerns over a slowdown in global growth offered support to the safe-haven metal.
As of 0323 GMT, spot gold was 0.1 percent higher at $1,313.47 per ounce, after slipping to its lowest since Feb. 15 at $1,311.61 earlier in the session.
U.S. gold futures were down 0.1 percent at $1,314.80 per ounce.
The dollar, which pulled back from over three-week lows, moved closer to a 10-week high against the yen and was marginally higher against major currencies.
The U.S. Commerce Department's report showed a better-than-expected performance in the fourth quarter pushed gross domestic product (GDP) up 2.9 percent for the year, just shy of the 3 percent annual growth target in 2018.
"Gold is still fundamentally supported for the longer term despite the bearish pressures we see for now due to slight rise in bond yields and a firm dollar," said Benjamin Lu, an analyst with Singapore-based Phillip Futures.
The benchmark 10-year government yield was up 3.1 basis points on Thursday after the U.S. data.
Higher yields can translate into more demand for the dollar since the currency is used to buy bonds, a traditional safe haven, eroding bullion's appeal.
"Asian economic data has weakened significantly and it continues to show that the economy has started to slow," Lu said, adding gold was being supported by broad-based economic weaknesses.
Factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis.
Also, Japanese manufacturing activity contracted in February at the fastest pace in two-and-a-half years as factories cut back output amid shrinking domestic and export orders, a revised survey showed on Friday.
Gold has lost the support from $1,320 level, technically and has not got enough boost from Federal Reserve Chairman Jerome Powell's testimony and negative news on China-U.S. trade, Hong Kong-based bullion dealer Wing Fung said in a note.
"Concerning the slowdown of global economic growth, we are not pessimistic about gold," Wing Fung said, adding the metal has a strong support at $1,300 level.
Reflecting a drop in bullion prices, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.52 percent on Thursday.
Gold may break a support at $1,311 per ounce and fall to the next support at $1,299, according to Reuters analyst Wang Tao.
Among the other precious metals, palladium gained 0.3 percent to $1,548.27 per ounce, after retreating from its all-time peak of 1,565.09 scaled earlier in the week.
Platinum was up 0.3 percent at $872.16 per ounce, but was trading below its more than three-month high of $876 hit in the previous session.
Spot silver was flat at $15.60 per ounce.