Gold Continues Drop After US Economy Strength

Gold futures maintained declines after a government report showed the U.S. economy expanded last quarter at the fastest rate since 2011, crimping demand for the metal as an alternative investment.

Gross domestic product rose at a 4.6 percent annualized rate, compared with an earlier estimate of 4.2 percent, government data showed today. The latest figure matched the median forecast in a Bloomberg survey of economists. A measure of inflation, which is tied to consumer spending and strips out food and energy costs, climbed at a 2 percent annualized pace.

Bullion is headed for its first quarterly loss this year amid low inflation and bets that the U.S. recovery will prompt the Federal Reserve to boost interest rates before its peers. The Bloomberg Dollar Spot Index rose 0.1 percent against a basket of currencies.

Gold futures for December delivery fell 0.2 percent to $1,220 an ounce at 8:39 a.m. on the Comex in New York. Earlier, the price rose as much as 0.9 percent.

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 cut its monthly asset purchases by another $10 billion to $15 billion this month, keeping it on track to announce an end to the program in October. Policy makers also raised their median estimate for the federal funds rate at the end of 2015 to 1.375 percent from 1.125 percent in June.


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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza