Gold Lifted By Faint QE3 Hopes

Published on Friday, 27 April 2012 18:25 Written by Todd Shriber

New York, April 27^th (TradersHuddle.com) – Gold futures ended the week in positive territory as a preliminary reading of first-quarter U.S. GDP growth was below the fourth-quarter’s final reading, news that renewed faint hopes that the Federal Reserve might still act to deploy a third round of quantitative easing. Comex gold for June delivery, rose $4.30, or 0.3%, to finish the day at $1,664.80 a troy ounce. That’s gold’s best closing price in nearly three weeks.

The Commerce Department said U.S. GDP grew by 2.2% in the first quarter down from 3% growth in the fourth quarter. Economists expected a first-quarter reading of 2.6%. The PowerShares DB Dollar Bullish (NYSE: UUP) continued its tailspin as the U.S. Dollar Index traded down to its lowest levels since April 3.

Money managers and traders have been reducing their net long positions in gold and silver, data from the Commodities Futures Trading Commission show. Funds pared gold holdings 4% to 10.7 million troy ounces while money managers cut silver holdings 20% to 53.7 million troy ounces, according to the Wall Street Journal. The CFTC data also show speculators reduced their long exposure in palladium but increased their bullish bets on platinum.

Gold’s modestly bullish on Friday was arguably surprising given that ratings agency Standard & Poor’s downgraded Spain’s credit rating for the second time this year. On Thursday cut its credit rating on Spain, the Euro Zone’s fourth-largest economy, to BBB+ from A. That’s a two-level downgrade, though Spain still holds an investment-grade rating.

Kitco’s gold survey showed 26 participants and of those 26 participants, 21 see prices up, while three see prices down, and two are neutral for the week ahead, according to the precious metals research firm.

Traders appear to be betting on some upside for copper as net long positions in the red metal increased, the CFCT data show. That may have helped propel the iPath DJ-UBS Copper TR Sub-Index ETN (NYSE: JJC) to a gain of almost 1.1% today. That’s better than the 0.3% offered by the iShares Gold Trust (NYSE: IAU) and the 0.2% offered by the SPDR Gold Shares (NYSE: GLD). On extremely weak turnover, the iShares Silver Trust (NYSE: SLV) gained almost two-thirds of a percent.

Looking at the miners, the Global X Silver Miners ETF (NYSE: SIL) continued its winning ways, adding almost 0.4% on strong volume. That’s the third consecutive day of strong volume gains for SIL. The Market Vectors Gold Miners ETF (NYSE: GDX) is showing some slight signs of firming, though that has been said before. The ETF gained 1.2% today on light volume. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) added 1.8% on decent volume for a Friday.