Gold prices ended lower on Thursday, pulling back from their highest levels in nine months and posting their first decline in six sessions, after a stronger-than-expected U.S. GDP report.
Price action
-
Gold prices for February
GC00,
-0.59% GCG23,
-0.59%
fell by $12.60, or nearly 0.7%, to settle at $1,930 per ounce on Comex after settling at the highest level for a most-active contract in nine months on Wednesday. -
Silver prices for March
SI00,
+0.37% SIH23,
+0.37%
climbed by 8 cents, or 0.3%, to $24.02 per ounce. -
March palladium
PAH23,
-1.30%
lost $24.10, or 1.4%, at $1,663.80 per ounce, while platinum for April
PLJ23,
-2.05%
declined by $23.10, or 2.2%, to $1,023 per ounce. -
Copper for March
HGH23,
+0.65%
settled at $4.2675 per pound, up 2 cents, or 0.5%.
Market drivers
Gold dropped partly because the robust U.S. GDP growth data released Thursday will encourage the Federal Reserve “to be more hawkish,” said Brien Lundin, editor of Gold Newsletter.
The precious metal also saw prices fall because it has “gained over $300 so far in this rally, and some are undoubtedly looking for an excuse to take some money off the table,” he told MarketWatch.
A reading on U.S. gross domestic product showed the economy grew at a robust 2.9% annual pace in the fourth quarter. GDP expanded at an above-normal rate for the second quarter in a row.
“ “This report is a green light for more Fed rate hikes.””
“This report is a green light for more Fed rate hikes,” said Jason Schenker, president of Prestige Economics, in a note. He expects the U.S. central bank to announced an interest rate hike on Feb. 1, as well as a “likely rate hike” on March 22, with both of the rate hikes likely to be 25 basis points.
Still, Wall Street economists predict the U.S. will slow to a crawl in the first quarter, and barely grow at all this year.
“The Fed should meet expectations with a quarter-point hike next week, and this would help keep the bullish flames under the gold market,” said Lundin. A 25-basis point increase would be smaller than the half-percentage point rate hike Fed officials approved last month.
Following the GDP data, the U.S. dollar strengthened against major currencies, also pressuring dollar-denominated prices of gold. The ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s strength against a basket of rivals, rose 0.2% at 101.88.
Among other economic data released Thursday, orders for manufactured goods jumped 5.6% in December. Economists polled by the Wall Street Journal had forecast a 2.4% increase.
