Gold Rebounds After Weak US Data

Gold turned higher on Wednesday as the dollar pared gains after weaker than expected U.S. economic data, although stronger European shares limited the upside.

Spot gold, lower initially, rose 0.2 percent to $1,195.51 an ounce by 1432 GMT. It had fallen as much as 1.2 percent to a two-week low of $1,183.68 on Tuesday.

U.S. gold for June delivery dropped $3.00 to $1,195.60 an ounce.

The dollar cut initial gains and was unchanged against a basket of currencies, after data showed U.S. industrial output fell 0.6 percent in March.

“The dollar’s retreat is mainly due to the weak U.S. economic data …as long as we have weak economic figures out of the U.S., it is less likely that the Fed will start raising interest rates sooner rather than later,” Commerzbank analyst Daniel Briesemann said.

The U.S. curency also lost ground against the euro after the European Central Bank (ECB) said it expects euro zone economic recovery to broaden and strengthen and ruled out a cut to deposit rate.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza