Comex gold still down but weak US GP data lends some support

Gold on the Comex division of the New York Mercantile Exchange regained some of its footing on Friday after slipping overnight due to easing oil prices, benefitting when US fourth-quarter GDP revision came in below expectations.

Gold futures for April delivery were recently trading down $8.20 at $1,407.60 per ounce in New York.

But it had fallen as low as $1,400.10 in electronic after-hours trade soon after oil dropped by $3 per barrel based on news that Saudi Arabia will make up for any shortages resulting from civil unrest in Libya.

"Gold is lacking direction as traders are navigating some strong cross-currents," a US-based fund manager said.

"There's now a clear consensus that [Libyan ruler] Kaddafi’s reign is far past its expiration date and should end before he has the opportunity to so something truly insane,” he said. “This, along with the Saudi's pledge to support the supply side, has allowed crude prices to stabilise and has coaxed some risk back into to the market.

But there is still some real concern that the protests could spread across the region so safe-haven is still alive and well, he added.

Additionally, Comex gold has rallied by about six percent this month and climbed within about 1.5 percent of the all-time contract high of $1,432.50, which was set on December 7.

"The air was getting pretty thin, so there's clearly some element of end-of-the-week profit-taking," the fund manager said. “We're going to experience a slight lull and may even see a mild correction before making a run towards the record in the coming days and weeks.”

Nevertheless, gold did find some support this morning after the US government revised its fourth-quarter GDP down to 2.8 percent - below a predicted 3.3 percent revision.

"Once news came out US GDP missed the mark, gold predictably firmed by a couple dollars. That news alone should allow the market to end the week above $1,400," the manager said.

In other precious metals, Comex silver for May delivery was down 32 cents at $32.86 per ounce. Trade has ranged from $32.06 to $33.13.

Platinum for April delivery on the Nymex was up $10.20 at $1,797.00 per ounce, while the March palladium contract was up $7.50 at $785.25.

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