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Gold Firms Above $1,300 on Cooling US Economy Fears

March 29, 2019 at 14:09 by Andrew Moran

Gold futures have firmed above $1,300 at the end of the trading week. It has been a volatile week for the yellow metal, falling to a two-week low and slipping below this crucial threshold. But gold will still post a quarterly gain, stemming mostly from a slowing US economy, global uncertainty, and the trade war between the world’s two largest economies.

June gold futures advanced $8.20, or 0.63%, to $1,303.50 per ounce at 13:35 GMT. Gold prices are on track for a weekly loss of 1.2%, but it will record a first-quarter increase of 0.6%.

Silver, the sister commodity to gold, is rallying to finish the trading week. May silver futures surged $0.20, or 1.3%, to $15.17 per ounce, after sliding under the $15 mark on Thursday. The white metal is also poised for a weekly decline of just under 2%, and it will report a Q1 drop of 2.25%.

Precious metals are benefiting from a weaker US dollar as the greenback tumbled 0.1% to 97.09. The buck will enjoy a weekly increase of 0.5%, as well as a Q1 boost of 0.7%. A weaker currency is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

The Bureau of Economic Analysis (BEA) published a plethora of data on Friday, signaling that the US economy is slowing down. Consumer spending edged up 0.1% in January, rebounding less than expected as the market anticipated a 0.3% gain. Personal income rose at a 0.2% clip, wages matched median estimates of a 0.3% jump, and savings plunged from $1.22 trillion in January to $1.19 trillion in February.

Analysts are projecting the gross domestic product (GDP) in the first quarter will come in as low as 0.9%. In the fourth quarter of 2018, the economy grew at a revised rate of 2.2%.

With the Federal Reserve hitting the pause button on interest rates, metal commodities could take advantage, considering how sensitive they are to a rising-rate environment. The Fed doubled down on its dovish stance, promising to take a more “patient” approach to monetary policy and penciling one rate hike in 2019. The central bank also cut its economic estimates, citing low inflation, slow growth, and bearish data.

In other metals markets, May copper futures soared $0.06, or 2.2%, to $2.93 per pound. May platinum futures climbed $15.70, or 1.86%, to $859.50 an ounce. May palladium skyrocketed $50.30, or 3.84%, to $1,360.00 per ounce.

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