Gold set for highest finish in 3 weeks as economic data feed global growth worries

Gold continued to push higher Friday, overcoming strength in the U.S. dollar as investors reacted to global growth fears that were underlined by a round of downbeat economic data, as well as the Federal Reserve’s dovish tone earlier this week.

Gold for April delivery GCJ9, +0.31% on Comex rose $5.10, or 0.4%, to $1,312.40 an ounce. It was poised for a weekly gain of about 0.7%, which would mark its third weekly rise in a row. May silver SIK9, -0.34% was down 3.2 cents, or 0.2%, at $15.405 an ounce, but traded up 0.5% for the week.

Benchmark U.S. stock indexes headed lower and European equities also fell after a round of downbeat economic data. The purchasing-managers-index readings for the eurozone came in much weaker than expected, while the IHS Markit U.S. flash manufacturing PMI fell to 52.5 in March from 53 a month earlier. The data underlined worries over global growth prospects and sparking investor appetite for haven assets.

While gold gained ground, investors also bought German and U.S. government bonds. The yield on the German 10-year bond TMBMKDE-10Y, -156.16% known as the bund, slipped back below 0% for the first time since 2016. The 10-year U.S. government bond yield TMUBMUSD10Y, -4.04% also fell 10 basis points to 2.444%, trading below the yield on the 3-month T-bill and inverting that measure of the yield curve for the first time since 2007 and triggering a closely watched recession indicator. Yields fall as bond prices rise.

The data came after the Federal Reserve earlier this week signaled that most policy makers expect to deliver no rate increases in 2019 versus a previous indication of two hikes. The central bank also downgraded its growth forecast as it pledged to remain patient, following through on a January pivot that saw it abruptly put its policy of gradual monetary policy tightening on pause.

“With the passing of the latest FOMC meeting, we have seen the Fed remove nearly a half-percentage point from its growth estimate for 2019, raise concerns once again that growth in Europe and China was weakening, and then take rate hikes off the table this year,” said Christopher Louney, analyst at RBC Capital Markets, in a note. “For a while we have believed that the path of the Fed’s rate hikes was too shallow to really hold gold back — perhaps now the market’s realization can pull forward some gains, albeit not enough to change our view.”

RBC looks for gold to hit the mid-$1300s in the next two quarters.

In other metals trade, June palladium PAM9, -2.54% dropped $33.90, or 2.2%, at $1,524 an ounce, trading 0.4% higher for the week. Prices on Thursday ended lower, breaking a string of consecutive record settlements. April platinum PLJ9, -1.21% declined $8.70, or 1%, to $852.40 an ounce, up about 2.5% for the week.

May copper HGK9, -2.06% fell 4.1 cents, or 1.4%, to $2.866 a pound, poised for a weekly loss of 1.4%.

The gold-backed SPDR Gold Shares GLD, +0.18% exchange-traded fund edged up by 0.4%, looking at a weekly rise of 1%.

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