Gold futures headed for a second straight decline after a government report showed U.S. economic growth rebounded more than forecast last quarter, crimping demand for the metal as an alternative investment.
Gross domestic product rose at a 4 percent annualized rate, compared with a revised 2.1 percent drop in the first quarter, government data showed today. The median forecast in a Bloomberg survey of economists was for a 3 percent gain. The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major counterparts, rose to the highest since March.
Through yesterday, gold climbed 8.2 percent this year as violence in the Middle East and Ukraine boosted demand for the metal as a haven. Faster economic growth gives the Federal Reserve more leeway to raise U.S. interest rates after tapering monetary stimulus. The central bank ends a two-day policy meeting today.
“Its a tug of war between strong economic numbers and increasing violence,” Miguel Perez-Santalla, sales and marketing manager at Heraeus Metals New York LLC, said in a telephone interview. “The dollar strength could put further pressure on gold.
Gold futures for December delivery fell 0.3 percent to $1,297.10 an ounce at 9:46 a.m. on the Comex in New York. Earlier, the price rose as much as 0.4 percent. Trading was 31 percent above the average for the past 100 days for this time, data compiled by Bloomberg show.
The metal tumbled 28 percent in 2013, ending a 12-year rally, on expectations that the Fed would scale back stimulus as the economy recovers. The central bank will probably cut its monthly asset purchases by another $10 billion to $25 billion, a Bloomberg News survey shows.