Gold Drops Below $1,200 after FOMC

Gold fell below $1,200 an ounce as a government report showed that the U.S. economy expanded more than forecast, damping demand for the metal as an alternative investment. Silver tumbled to a 55-month low.

Gross domestic product grew at a 3.5 percent annualized rate in the third quarter, compared with a median forecast for a 3 percent advance by economists in a Bloomberg survey, data showed today. Gold fell to a three-week low, a day after the Federal Reserve announced an end to monthly debt purchases to bolster the economy.

Global holdings in exchange-traded products backed by gold have dropped to the lowest in five years. On Oct. 6, gold touched $1,183.30, the lowest this year. Fewer Americans filed applications for unemployment benefits over the past month than at any time in 14 years, government figures showed today.

“Gold dipped further on the stronger-than-expected GDP print and weekly claims” for jobless benefits, Tai Wong, the director of commodity product trading at BMO Capital Markets Corp. in New York, said in a telephone interview. “The market was already under pressure as the Fed ended the QE, and there are no worries about inflation.”

Gold futures for December delivery fell 1.9 percent to $1,202 at 10:39 a.m. on the Comex in New York. Earlier, the price touched $1,199.30, the lowest for a most-active contract since Oct. 6. Aggregate trading was 52 percent above the average for the past 100 days for this time, according to data compiled by Bloomberg.

via Bloomberg

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