Gold prices eased yesterday, having touched a more-than one week high in the previous session, as stronger equity markets lifted risk-sentiment, thereby eroding safe-haven demand of the metal.
Spot gold fell by 0,3 percent to $1,281.87 per ounce at 0847 GMT, having hit its highest since April 16 at $1,288.59 in the previous session.
US gold futures shed 0,4 percent to $1,283.80 an ounce.
“There have been rebounds in both US and Chinese data. This is beating the safe-haven demand and helping the equity markets instead,” said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.
Global shares rose yesterday, aided by data showing profits at Chinese industrial firms grew for the first time in four months and a strong reading of US first quarter growth data last week.
Chinese industrial firms rose 13,9 percent year-on-year in March, thereby furthering optimism that the country’s economy may be starting to stabilise.
Friday’s gross domestic product (GDP) data from the United States also saw the country’s economy grow by 3,2 percent in the first quarter.
The recent uplift in equities has kept gold under the wraps with holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, falling 0,16 percent to its lowest since October 19 at 746,69 tonnes on Friday. Holdings have fallen by over 3 percent since the beginning of this month.
However, the US GDP data also instigated questions about the actual economic strength of the country, since the quarterly growth figures were largely driven by temporary factors like a smaller trade deficit and the largest accumulation of unsold merchandise since 2015.
Data showed that core personal consumption expenditure price index figure, the Fed’s preferred metric of inflation, increased at only a 1,3 percent rate versus 1,8 percent in the prior quarter.