Investing.com - Gold futures rose on Wednesday after weak U.S. GDP data sent investors rethinking how long interest rates may rise in the U.S., though soft physical demand dampened the yellow metal's gains.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,322.20 a troy ounce during U.S. trading, up 0.07%, up from a session low of $1,311.40 and off a high of $1,325.60.
The August contract settled up 0.22% at $1,321.30 on Tuesday.
Futures were likely to find support at $1,310.40 a troy ounce, Monday's low, and resistance at $1,326.60, Tuesday's high.
The Commerce Department reported earlier that U.S. gross domestic product contracted at an annual rate of 2.9% in the first quarter of the year, far surpassing consensus forecasts for a decline of 1.7%.
U.S. first-quarter GDP was initially reported to have increased by 0.1%, but was subsequently revised to show a contraction of 1.0%.
The difference between the second and third estimate was the largest since records began in 1976, the Commerce Department added.
A separate report showed that U.S. durable goods orders fell 1.0% in May, while core durable goods orders fell 0.1%. Market expectations had been for an increase of 0.2% and 0.4%, respectively.
The data weakened the dollar by fueling expectations for the Federal Reserve to keep benchmark interest rates on hold at record lows for longer than once thought, which boosted gold, as the precious metal often trades as a hedge to a softer greenback.
Still, the dollar didn't plummet, as rough winter weather likely exacerbated the economy's poor showing, while recent data has suggested that U.S. economic activity has rebounded sharply from the first three months of the year.
The poor GDP showing also failed to convince investors that the Federal Reserve will keep dollar-weakening stimulus programs in place for longer than expected.
The U.S. central bank is widely seen closing its bond-buying program this year.
Fed bond purchases tend to weaken the dollar by suppressing long-term interest rates, which sends investors to assets like stocks, thus boosting demand for gold to offset the weaker greenback.
Expectations for the Fed to continue tapering asset purchases watered down gold's gains as did reports that physical demand has been softening.
Meanwhile, silver for September delivery was up 0.19% at $21.138 a troy ounce, while copper futures for September delivery were up 0.63% at $3.165 a pound.