Gold drops on profit taking as rally on physical demand wanes
Published Apr 26, 2013 01:10PM ET
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery were down 0.56% at USD1,453.75 a troy ounce in U.S. trading on Friday, up from a session low of USD1,448.05 and down from a high of USD1,484.75 a troy ounce.
Gold futures were likely to test support USD1,403.55 a troy ounce, Monday's low, and resistance at USD1,484.75, the earlier high.
Reports of increased physical demand for gold in Asia as well talk of rising demand from central banks pushed up gold prices earlier until investors sold the metal for profits.
U.S. data also hiked up gold prices before profit taking kicked in.
In the U.S. earlier, the Bureau of Economic Analysis revealed in a preliminary report that the U.S. gross domestic product rose 2.5% in the first quarter, missing expectations for a 3.0% increase though an improvement from a 0.4% rise in the previous quarter.
The news weakened the dollar by fueling sentiments that the Federal Reserve's monetary stimulus programs will stay in place for longer than expected.
Stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the greenback to spur recovery, which makes gold an attractive hedge.
Elsewhere, the Thomson Reuters/University of Michigan's consumer sentiment index rose to 76.4 in April, from a reading of 72.3 the previous month, beating expectations for an increase to 73.2.
Elsewhere on the Comex, silver for May delivery was down 1.40% at USD23.803 a troy ounce, while copper for May delivery was down 1.84% and trading at USD3.178 a pound.
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Written By: Investing.com
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