Writing for kitco.com, Neils Christensen says that while gold was preparing to see its third week of consecutive losses, the market was not hit with a new wave of selling after US economic data showed the economy expanding by 4.1% in the second quarter.
Ole Hansen, head of commodity strategy at Saxo Bank, said that despite the strong gross domestic product data, gold has managed to hold above critical support levels. He added that gold could see a bit of a boost going forward as investors readjust their expectations on economic growth going forward.
"There is some belief among investors that this could be a good as it gets for the rest of the year," he said. "Many things have happened since the end of the second quarter."
Bill Baruch, president of Blue Line Futures, said that although the GDP report showed robust growth, the market was already expecting a substantial number. He added that there are fewer factors in place that will continue to drive the US dollar high and gold prices lower in the medium term.
Looking at gold, he said that the market was pretty much as bearish as it can get.
"Shorts are already positioned in gold and we think we are building a floor. We will continue to see limited downside risk for gold going forward," Baruch said.
Maxwell Gold of Aberdeen Standard Investments also said that economic growth could struggle to maintain its current momentum. He added the current gold price was an attractive entry point for investors to build a strategic position.
"Gold is down but certainly not out," he said. "The growth numbers we are seeing are common in late-stage economic cycles and I think gold will look attractive as investors worry about continued economic growth going forward."
Meanwhile the World Gold Council reported that gold demand stayed soft in the second quarter, dropping to 964.3 tonnes. The first half total of 1959.9t is the lowest since 2009.
Exchange traded fund inflows have steadied at low levels in recent quarters, making for weak year-on-year comparisons. Second quarter jewellery demand dipped 2% to 510.3t, largely due to a weaker Indian market.
The pace of central bank buying also slowed in second quarter (-7%). Bar and coin demand was virtually unchanged as growth in a few key markets cancelled out weakness elsewhere.
Technology demand provided some relief, adding 2% to reach a three-year high. Gold supply notched up a second consecutive quarter of growth, (up 3%) reaching 1120.2t.
Overnight, the gold price was fixed at $1208.56.
The WTI crude oil price was up overnight at $68.99 per barrel.
In softer commodities, cocoa creased $2 per tonne or 0.10% to $2072/t yesterday from the $2070 in the previous trading session, tradingeconomics.com reported. Historically, cocoa reached an all-time high of $4361.58/t in July of 1977 and a record low of $211/t in July of 1965.
Coffee creased 1.10c per pound or 1.02% to 106.95c/lb yesterday from 108.05c/lb in the previous trading session, tradingeconomics.com reported. Historically, coffee reached an all-time high of 339.86c/lb in April of 1977 and a record low of 42.50c/lb in October of 2001.