Gold prices benefitted from a weaker dollar and rebounded on Monday to recover some losses from Friday’s sharp drop.
If gold is priced in USD, a weaker dollar makes it cheaper for holders of other currencies to buy gold. The two assets thus usually have an inverse price relationship.
On Friday, US GDP came in much lower than expected, at 2.5 percent versus 3 percent forecast, and is this is weighing heavily on the dollar.
Gold prices have climbed over $16 in trading so far today to $ to $1,478 an ounce.
Since Friday’s low of $1,447, gold prices are up 2 percent, and have recorded gains of more than 4.2 percent last week, for the first advance in five weeks.
The ICE dollar index, which is a measure of the dollar’s performance against six of its major counterparts, slid to 82.154 by early European trading, compared with 82.484 in North America late on Friday.
However, despite last week’s rebound in gold prices, it has been on a steady decline since last October, retreating from $1,795.
Some analysts say the drop in gold prices signals an economic downturn, especially in the United States, where recent economic data have indicated a slowdown.