Gold's London AM fix on Friday morning was USD 1,670.50, EUR 1,269.86, and GBP 1,048.91 per ounce.
Thursday's AM fix was USD 1,655.50, EUR 1,261.33 and GBP 1,039.04 per ounce.
Gold rose $17.10 or 1.03% in New York on Thursday and closed at $1,675.20/oz. Gold rose sharply in just a few minutes of trade on heavy volume - about 33,000 contracts between 1430 and 1500 GMT. Gold traded erratically but essentially sideways in Asian trading prior to ticking lower in Europe.
Weaker gold prices are being attributed to China's weaker than expected Q1 GDP data. However, Asian equity indices were higher. A slightly stronger U.S. dollar and oil prices back below $103 a barrel (NYMEX) may have contributed to Friday's weakness.
China's GDP grew 8.1% which was well below expectations - expanding at its slowest pace since Q1 2009. GDP growth slowed from the 8.9% rise in Q4 of 2011 and was below the average forecast from economists polled by Dow Jones, Bloomberg and Reuters.
The North Korean rocket launch may have led to a safe haven bid which was taken out of the market after the rocket failure.
Gold bullion remains supported, mostly due to a pickup in physical Indian and Chinese gold demand this week. There are expectations of sustained Indian consumption next week in the lead up to the Akshaya Tritiya festival later this month.
Western physical buying remains unusually anaemic - for now (view chart here).
In recent years, April and May have been positive months for gold in terms of returns (see table above).
April has returned 1.4% per annum in the course of the current bull market since 2000.
May has returned 1.75% per annum in the course of the current bull market since 2000.
Interestingly, the last month of Q1 and Q2, March and June, have been negative in terms of returns.
March in particular has seen the poorest returns for any month in the last 11 years with average falls of 0.6%.
Therefore the very poor performance of gold in March 2012 (-6.4%) may represent another buying opportunity as it did last year (see chart below) and in previous years.
Gold traded marginally lower last March prior to sharp gains in April 2011 when gold rose 8% (silver rose 28%).
This was followed by a correction in May and consolidation in June prior to further sharp gains in July and August.
Looking at the quarterly performance of 2011, gold traded marginally higher in Q1 prior to gains in Q2 and then strong gains in Q3.
Bullion then encountered a sharp correction and consolidation seen at the very end of Q3 which continued into Q4.
This continued in Q1 2012 but the gains in Q1 2012 (6.7% gain in Q1) were important and make the long term technicals favourable again.
While past performance is no guarantee of future returns, these are monthly, quarterly and seasonal patterns that are worth considering and suggest that diversifying on the dip remains prudent.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.