Gold rebounded Friday in response to a report showing weaker-than-expected U.S. economic growth, closing out January 8% higher, its best monthly percentage gain since January 2012.
Gold futures for February delivery GCG5, +2.26% rallied $23.90, or 1.9%, to settle at $1,278.50 an ounce. March silver futures SIH5, +2.87% gained 43 cents, or 2.6%, to $17.21 an ounce.
Gold futures strengthened after the Commerce Department said fourth-quarter U.S. gross domestic product expanded at a 2.6% annualized pace, compared with expectations for 3.2% growth.
“The U.S. GDP number released today has clearly shown that the growth is slowing down and this is a positive sign if you are a buyer of gold,” said Naeem Aslam, chief market analyst at London-based AvaTrade.
Gold has gained ground this month as investors sought havens in the wake of turmoil and increased volatility sparked by plunging oil prices and accelerated by the Swiss central bank’s decision to abandon a cap on the value of its currency versus the euro.
On Thursday, gold dropped 2.4% in its biggest one-day decline in 13 months as investors booked profits on reaffirmed expectations for a midyear rate hike by the Federal Reserve and upbeat economic data.
Meanwhile, inflows into gold exchange-traded funds have picked up, hitting the highest level since September 2012, noted Eugen Weinberg, commodity strategist at Commerzbank.
“The U-turn made by ETF investors is one of the most remarkable developments on the gold market this year and one key reason for the price rise since the start of the year,” Weinberg said, in a note.
At the same time, a large rise in speculative long positions in gold futures had left the market vulnerable to the profit-taking wave that hammered the yellow metal on Thursday, analysts said.