The rebound in gold prices accelerated on Friday as Treasury yields and the dollar fell on US GDP data. The precious metal saw the largest daily gain in nearly two months and registered a mid-April high above $1,288 after three days of gains.
The headline GDP number was really good, with the US economy unexpectedly grew 3.2% versus 2.3% expected. But the details of the report were not so rosy as much of the spectacular rise was due to inventories and trade, while private consumption cooled for a third consecutive quarter. As traders assessed the details of the report, the greenback came under a widespread pressure, which played into the bullion’s hands.
However, the yellow metal turned negative on Monday as dollar steadied and stocks recovered. In the days to come, gold could go lower if risk-on sentiment is encouraged by further progress in the US-China trade talks, and the Federal Reserve confirm its commitment to the dovish stance during the upcoming to-day meeting that concludes on Wednesday. Technically, the bullion needs to hold above the $1,270 area in order to avoid a more aggressive selling pressure in the short term.