By Mark Decambre
Gold futures jumped Friday after a report on U.S. economic growth came in weaker than expected, pushing the dollar lower and providing support for the precious metal.
Gold is on track for its first weekly gain in three weeks as expectations of lower interest rates for longer and a slump for the U.S. dollar, helped support gold prices.
Gross domestic product grew at a seasonally adjusted annual rate of 1.2% in the second quarter, the Commerce Department said Friday. Economists surveyed by MarketWatch had expected a 2.6% pace.
December gold GCZ6, +0.68% gained $13.50, or 1%, at $1,354.10 an ounce, after hitting a two-week high Thursday, buoyed by inaction at the Federal Reserve’s Wednesday policy meeting and investors’ belief that the central bank lacks the confidence to lift rates too abruptly without further signs of strength in the U.S. economy. On Friday, gold was on pace to reach its highest settlement since July 11.
Weak GDP data is likely to provide the Fed with more cause to move cautiously in its plans to hike rates, given a string of data that has outlined an uneven U.S. economic recovery.
The weaker-than-expected GDP report extended losses for the dollar, as measured by the ICE U.S. Dollar Index DXY, -0.91% —a gauge of the buck against a basket of six rival currencies. The buck is down 0.7% on the day and looking at a 1.1% weekly decline.
Ultralow rates around the world, and the prospect that interest rates may remain lower for longer, have weighed on the dollar and provided support for dollar-priced commodities, like gold. Lower rates also can boost the appeal of metals that don’t offer a yield like gold.