Gold slides on euro zone recession fears

Investing.com - Gold futures extended losses from Thursday’s U.S. session in the early part of Asian trading today as traders digested some slack economic data out of Europe.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery fell 0.24% to USD1,631.65 per troy ounce in Asian trading Friday. That decline comes after gold settled down 0.54% at USD1,636.15 a troy ounce in U.S. trading on Thursday.

Gold futures were likely to test support USD1,626.05 a troy ounce, the low from Jan. 4, and resistance at USD1,653.75, Wednesday's high.

On Thursday, a reported showed the euro zone’s fourth-quarter GDP contracted by 0.6%, well below expectations for a 0.4% quarterly decline and far surpassing the previous 0.1% contraction. It was the worst rate of contraction since 2009 and the third straight quarter of negative growth. Typically, economists consider an economy to be in recession with two consecutive negative GDP readings.

Adding to the selling pressure on the euro and thereby gold, other reports showed Germany’s fourth-quarter GDP contracted by 0.6%, below expectations calling for a 0.5% drop. France’s fourth-quarter GDP shrank 0.3% while Italy’s contracted by 0.9%.

Germany, France and Italy are the euro zone’s three largest economies, in that order.

Adding to gold’s woes was a report by the World Gold Council that showed physical demand for bullion fell in 2012 for the first time in three years.

The economic news was better across the Atlantic. In U.S. economic news, initial claims for jobless benefits fell by 27,000 last week to 341,000 claims. Economists expected a decrease of just 6,000. The less volatile four-week moving average rose by 1,500 to 352,500.

Elsewhere, Comex silver for March delivery fell 0.18% to USD30.298 per ounce. Copper for March delivery lost 0.06% to USD3.741 an ounce.