Gold plummets as market overlooks growth data, bets on end to stimulus
Published Jun 26, 2013 02:21PM ET
Stimulus programs such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, which makes gold an attractive hedge, though talk of an end to stimulus programs firms the greenback and makes gold less attractive.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 3.41% at USD1,231.65 a troy ounce in U.S. trading on Wednesday, up from a session low of USD1,223.45 and down from a high of USD1,277.25 a troy ounce.
Gold futures were likely to find support at USD1,211.50 a troy ounce, the low from Aug. 24, 2010, and resistance at USD1,300.55, Monday's high.
The Commerce Department said U.S. gross domestic product expanded at an annual rate of 1.8% in the three months to March, below an earlier estimate of 2.4% growth. Economists had expected the growth rate to remain unchanged at 2.4%.
The report said consumer spending was revised down from 3.4% to 2.6%.
Gold, however, turned south as investors remained convinced that stimulus programs will soon taper, especially in wake of stronger-than-expected factory, housing and consumer-sentiment figures released earlier this week.
Many investors sold gold for cash to invest in stocks on sentiment that an improving U.S. economy will lead to a long-term bull market for equities.
Elsewhere on the Comex, silver for September delivery was down 4.59% at USD18.655 a troy ounce, while copper for September delivery was down 0.93% and trading at USD3.047 a pound.
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Written By: Investing.com
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