Gold prices rose the most in two weeks after a report showed the U.S. economy unexpectedly shrank in the fourth quarter, boosting demand for the metal as a haven asset.
Gross domestic product, the volume of all goods and services produced, dropped at a 0.1 percent annual rate, weaker than any forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in the recession, Commerce Department figures showed today. The contraction may spur the Federal Reserve, which concludes a two-day meeting today, to increase stimulus measures aimed at sparking a recovery.
“Clearly with the negative GDP, we’re seeing a flight to safety,” Tim Evans, the chief market strategist at Long Leaf Trading Group in Chicago, said in a telephone interview. “Growth has been fairly stable in recent quarters, but if we see more numbers like this, gold is going to have a good run.”
Gold futures for April delivery climbed 0.8 percent to $1,676.70 an ounce at 8:45 a.m. on the Comex in New York, heading for the biggest gain for a most-active contract since Jan. 15.