Gold futures down sharply amid Fed taper speculation

Investing.com - Gold futures fell sharply on Thursday, briefly tumbling below the USD1,300-level, after data showed that the U.S. economy grew at a faster than expected rate in the third quarter and jobless claims fell.

The upbeat data fuelled speculation that the Federal Reserve will begin to taper its stimulus program at its December meeting.

Gold prices have largely tracked shifting expectations as to whether the Fed will begin to scale back its USD85-billion-a-month asset-purchase program sooner than expected.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,304.90 a troy ounce during U.S. morning trade, down 1%.

Comes gold prices fell by as much as 1.6% to USD1,296.90 a troy ounce earlier, the lowest since October 17. The December contract ended 0.74% higher on Wednesday to settle at USD1,317.80 a troy ounce.

Gold futures were likely to find support at USD1,273.80 a troy ounce, the low from October 17 and resistance at USD1,327.30, the high from November 1.

The dollar strengthened across the board after official data showed that the U.S. economy grew at an annual rate of 2.8% in the three months to September, well above expectations for growth of 2%. The U.S. economy grew by 2.5% in the preceding quarter.

The robust data fuelled expectations that the Fed will start to taper its stimulus program as soon at its next monthly meeting in December.

Meanwhile, the Department of Labor said the number of individuals filing for initial jobless benefits in the U.S. last week fell by 9,000 to a seasonally adjusted 336,000.

Analysts had expected U.S. jobless claims to fall by 10,000 to 335,000 last week from the previous week’s total of 345,000.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.85% to trade at 81.25.

Gold prices often move inversely to the U.S. dollar, as gold becomes more expensive for buyers using other currencies.

Gold prices briefly rose to a session high of USD1,325.70 a troy ounce after the European Central Bank lowered its benchmark interest rate to a record-low of 0.25% from 0.5%, saying the decision was 'in line' with the ECB's forward guidance on interest rate policy from July.

ECB President Mario Draghi reiterated that euro zone borrowing costs will remain at their present or lower levels until conditions improve, indicating that further rate cuts are still possible.

Elsewhere on the Comex, silver for December delivery dropped 0.9% to trade at USD21.56 a troy ounce, while copper for December delivery inched up 0.1% to trade at USD3.240 a pound.