Gold futures headed higher Thursday, rising above a psychologically significant level at $1,800 that the precious metal has struggled to hold above in recent weeks, after data showing growth in the U.S. economy significantly slowed in the third quarter.
Gold rose in the wake of a U.S. gross domestic product report that was “downbeat and fell into the camp of the U.S. monetary policy doves, who want the Federal Reserve to hold off on tapering its monetary policy stimulus,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note.
U.S. gross domestic product growth decelerated to an 2% annualized rate in the third quarter, down from a 6.7% rate in the April-June quarter, the Commerce Department said Thursday.
Against that backdrop, December gold was up $5.70, or 0.3%, at $1,804.50 an ounce, following a 0.3% gain on Wednesday. The most-active contract hasn’t settled above $1,800 since Monday, FactSet data show.
According to a report from the World Gold Council released late Wednesday, total global gold demand posted a year-over-year decline for the third quarter, with investment in the precious metal down by more than 50% — led by a quarterly outflow in gold-backed exchange-traded funds.
A chunk of that decline was a result of outflows from global exchange-traded funds, which registered outflows of 26.7 metric tons, according to the report.
Silver futures for December delivery meanwhile, picked up 7.9 cents, or 0.3%, at $24.27 an ounce, after settling 0.4% higher a day ago.
Metals traders also weighed a decision by the European Central Bank, which left its monetary policy measured unchanged, as expected, saying it would continue to purchase assets via its pandemic emergency purchase program at a slower pace than seen in the second and third quarters.
Gold prices on Wednesday briefly fell as the Bank of Canada said it was ending its quantitative-easing program, with an eye toward eventually raising interest rates. However, a pullback in yields, with the 10-year Treasury and the 30-year bond seeing their biggest yield drops in three months, helped support bullion buying.
The ECB’s more dovish stance on monetary policy could help to hold gold prices higher, strategists said.
“Gold investors are realising that the major central banks as a whole will probably not tighten monetary policy too aggressively even if inflation remains elevated,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a Thursday note.
“The rationale is that there’s still much spare capacity in the economy and the impact of temporary factors will wane in the months ahead, causing inflation to cool and reduce the need for central banks to tighten aggressively,” wrote Razaqzada.
Other metals traded on Comex moved higher as well, with December copper up 0.9% at $4.428 a pound.
January platinum tacked on 0.7% to $1,026 an ounce and December palladium traded at $2,001 an ounce, up nearly 1.4%.
Read More: Gold climbs back above $1,800 as U.S. GDP disappoints
