Gold Speculators Witness The Biggest Rally Since January

Gold is trading flat as traders seem sidelined this morning after the late week rally of precious metals. Gold is trading at 1223.40 down by $1.90 at this writing as prices continue to fluctuate between small gains and losses as the day begins.  Gold futures turned higher during Friday’s final minutes of trading to tally more than 3% gain for the week. Prices found support from a weaker U.S. dollar as investors assessed the latest economic data and their influence on the metal’s investment appeal. With “global growth due to easier monetary policies around the world and Fed interest-rate ‘liftoff’ this year, there will be additional pressure on gold prices. Other precious metals reflect gold’s action with silver added 49 points to 17.612 and platinum down a little bit at 1167.45.

In U.S. economic news on Friday, an index on manufacturers in New York State rose less than expected. Industrial production fell 0.3% in April and May consumer sentiment fell to a seven-month low. “The economic data released so far for this quarter has been disappointing and this has taken the dollar towards the downside,” said Naeem Aslam, chief market analyst at AvaTrade.

If Federal Reserve officials aren’t confident about the economic data, “it is highly unlikely that they will rush to raise the interest rate,” he said. If there is no rate hike any time soon, that would mean that the Fed is “running a loose monetary policy and this could keep on pushing the gold price higher.”

Money managers who hoarded bullion at the fastest pace in more than a month were rewarded with the biggest rally in prices since January. Weaker US consumer confidence and softening factory production drove the dollar lower for a fifth week, the longest stretch since 2013.

Gold, first struck into coins more than two millennia ago, is still sought by some investors as an alternative currency or hedge against inflation. Signs of cooling expansion mean the Federal Reserve could wait longer before raising interest rates, increasing the chances that inflation will accelerate. Record- low rates increase bullion’s appeal because the metal doesn’t pay interest, unlike competing assets such as new bonds.

Speculators’ net-long position in gold jumped 14 percent to 36,150 futures and options as of May 12, US Commodity Futures Trading Commission data show. That was the third advance in four weeks and the biggest gain since April 7. More than $1.7 billion was added to the value of exchange- traded products backed by gold last week, the most in four months. Fed officials will probably cut their forecasts for expansion when they gather next month, a Bloomberg survey of economists showed. At their April meeting, policy makers had suggested that slowing growth would be “transitory,” sending bullion prices lower for a third month. Gold has rebounded almost 4 percent in May as more signs of sputtering growth challenged the Fed’s view and stoked speculation that borrowing costs will stay low for longer.