PT EQUITYWORLD FUTURES SSC JAKARTA – Gold futures rebounded after a government report showed that the U.S. economy expanded at a slower pace than previously estimated in the fourth quarter.
The U.S. grew at a 2.2 percent annualized rate, down from an initial estimate of 2.6 percent, the Commerce Department said Friday. The figure for household consumption was also revised lower.
Slowing American expansion gives the Federal Reserve more room to keep interest rates low, reviving the appeal of precious metals as a store of value. Gold dropped 29 percent in the previous two years as the U.S. economy gained traction, increasing concern that the central bank would raise borrowing costs.
“This response of gold gaining happened after a GDP print that ended up being lower than the previous read, with personal consumption dropping,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “The combination of the two made people think the economy isn’t growing from strength to strength and may be easing up a little bit.”
Gold futures for April delivery rose 0.2 percent to settle at $1,213.10 an ounce at 1:37 p.m. on the Comex in New York, after falling as much as 0.5 percent.
Traders and analysts PT EQUITYWORLD FUTURES SSC JAKARTA are the most positive on prices in eight weeks, according to a Bloomberg survey that found 15 bullish responses, six bearish and two neutral.
The metal dropped 5.2 percent in February, the biggest decline since September, amid concern that U.S. borrowing costs will rise, and as a bailout deal reached for Greece cut demand for a haven.
Fed policy makers next meet March 17-18. Higher interest rates curb gold’s appeal because the metal generally gives returns only through price gains.
Silver futures for May delivery fell 0.4 percent to $16.558 an ounce, capping the first monthly decline since November.
Platinum futures for April delivery climbed 1 percent to $1,185.60 an ounce on the New York Mercantile Exchange. Palladium futures for June delivery increased 1 percent to $819.50 an ounce. The metal gained 6.1 percent this month, the most since July 2013.