Gold Futures Drop as US Growth, Inflation Fuel Fed Concerns
San Francisco (Dec 22) Gold futures headed for the first decline in three sessions after the U.S. economy grew faster than estimated last quarter, boosting the case for the Federal Reserve to continue raising interest rates.
The economy expanded at a revised 2 percent annualized rate, a government report showed Tuesday. The median forecast in a Bloomberg survey called for a 1.9 percent increase, compared with the previously reported 2.1 percent pace. Prices tied to consumer spending excluding food and fuel rose at a faster pace in the third quarter than previously estimated.
“The GDP number is a little higher, and it did cause some profit-taking,” Bob Haberkorn, a senior market strategist at RJO Futures in Chicago, said in a telephone interview.
Gold futures for February delivery fell 0.6 percent to settle at $1,074.10 an ounce at 1:39 p.m. on the Comex in New York. Prices rose 3 percent in the previous two sessions.
Bullion posted its biggest monthly decline in more than two years in November, before policy makers tightened monetary policy for the first time in almost a decade. Higher rates damp the appeal of gold because it doesn’t pay interest. Momentum in U.S. growth, along with concern that prices are starting to firm, may spur further rate increases from the Fed, which said last week that it planned “gradual” tightening as it watches for evidence of higher inflation.
Silver futures were little changed on the Comex, while palladium rose and platinum fell on the New York Mercantile Exchange.