By Tatyana Shumsky
NEW YORK--Gold prices rallied Friday after a
weaker-than-expected reading of U.S. economic health fanned
investor interest in the haven asset.
Gold for April delivery, the most actively traded contract, rose
$23.30, or 1.9%, to settle at $1,279.20 a troy ounce on the Comex
division of the New York Mercantile Exchange. Gold futures ended
January up 8%, the largest monthly gain since January 2012.
The U.S. economy expanded 2.6% during the final quarter of 2014,
the Commerce Department said Friday. This was a slowdown from 5%
growth clocked during the third quarter of last year, and it lagged
the 3.2% growth rate economists had expected.
Gold prices extended early-morning gains on the news as some
traders bet that the Federal Reserve would hold off on raising
interest rates amid signs that growth remains uneven. The U.S.
central bank has previously said that any shifts in monetary policy
would hinge on a steady economic recovery. On Wednesday, Fed
officials said they would be patient in raising interest rates, a
move expected in the second half of 2015.
"Signs are now pointing to the Fed needing to exercise that
patience, so we are seeing a relief rally in the metals," said
George Gero, a senior vice president with RBC Capital Markets
Global Futures.
A move to tighten monetary policy is expected to push gold
prices lower. Gold doesn't pay interest or dividends and could
struggle to lure investors away from Treasury bonds and other
interest-bearing assets when rates are climbing.
Still, gold prices are likely to benefit from a revival of
concerns about Greece. The eurozone member's new leftist leadership
has started to deliver on bold anti-austerity campaign promises
after a sweeping victory in Sunday's elections.
Recent investor polls point to a 24.3% chance the euro will
break up in the next 12 months, as a result of Greece leaving the
currency union, said Julian Jessop, head of commodities research at
Capital Economics, in a note. This is up from a low of 7.6% in July
last year.
Mr. Jessop said that as concerns about the euro escalate, gold
prices will also march higher. He expects gold prices to recover to
$1,400 an ounce by the end of 2015.
Settlements (ranges include open-outcry and electronic
trading):
London PM Gold Fix: $1,260.25; previous PM $1,268.75
Apr gold $1,279.20, up $23.30; Range $1,257.50-$279.50
Mar silver $17.208, up 43.5 cents; Range $16.815-$17.320
Apr platinum $1,238.20, up $20.90; Range $1,217.70-$1,242.50
Mar palladium $772.40, up 80 cents; Range $770.25-$784.00
Write to Tatyana Shumsky at tatyana.shumsky@wsj.com