Friday, 31 July 2015 00:17
NEW YORK/LONDON: Gold fell 1 percent on Thursday to a near a 5-1/2-year low as the dollar rose after data showed the US economy improved in the second quarter, supporting views that the Federal Reserve would lift rates by year-end.
The US Department of Commerce said gross domestic product expanded at a 2.3 percent annual rate.
First-quarter GDP, previously reported to have shrunk at a 0.2 percent pace, was revised up to show a 0.6 percent rise. Spot gold dropped as much as 1.3 percent to a session low of $ 1,081.85 an ounce in earlier trading, not far from its cheapest since February 2010 at $ 1,077 hit after a selloff on July 20. It was down 0.7 percent at $ 1,089.11 by 2:07 p.m. EDT (1807 GMT).
With the stronger dollar and the likelihood of a rate hike by the end of the year, “there’s no need for any kind of safety whatsoever,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
After a two-day meeting, Fed policymakers said the US economy had overcome a first-quarter slowdown and was “expanding moderately.” That buoyed the dollar, which was up 0.4 percent against a basket of leading currencies, making dollar-priced gold more costly for non-US buyers.
US gold for August delivery slipped 0.4 percent to settle at $ 1,088.40 an ounce.
“As the focus is back on the dollar and its strength, the trajectory for gold is down until a hike actually happens,” Citigroup strategist David Wilson said. Mizuho Bank said in a note that it expected just one rate increase this year, with the Fed adopting a gradual pace of tightening. “And policy will continue to be conditioned on data,” it added.
Holdings of the largest gold-backed exchange-traded fund, New York’s SPDR Gold Trust, were unchanged at 21.87 million ounces for a second day on Wednesday. That level is the lowest since September 2008.
Spot platinum was up 0.1 percent at $ 983.24 an ounce, within reach of a 6-1/2-year low of $ 942.49 hit in the previous week. Palladium was up 0.2 percent at $ 617.25 an ounce, and silver dropped 0.1 percent to $ 14.72 an ounce.
