Gold drops on strong U.S. data in run-up to Fed minutes
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Gold prices slipped on Wednesday as robust U.S. economic data lifted the dollar and Treasury yields ahead of minutes from the Federal Reserve’s November meeting that could provide cues on interest rate hikes.
Spot gold fell 0.4% to $1,782.58 per ounce by 09:29 a.m. ET (1429 GMT), while U.S. gold futures were down 0.1% at $1,782.00.
Gold slid below the key $1,800 mark earlier this week as the re-nomination of Fed Chair Jerome Powell bolstered bets of faster monetary policy tightening, boosting the dollar and in turn making bullion more expensive for overseas buyers.
Piling pressure on Wednesday was a drop in U.S. initial jobless claims to their lowest since 1969 and a separate report showing economic growth increased at a 2.1% annualized rate.
The solid U.S. gross domestic product data “can put more pressure on the Fed to accelerate tapering,” said Carlo Alberto De Casa, external analyst at Kinesis Money.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
Gold investors also seem to be discounting for the possibility of moderating inflation, given a recent retreat in energy prices, ED&F Man Capital Markets analysts Edward Meir said.
The Fed minutes could show “a much more hawkish stance because at that time everything was moving much higher. So the minutes might be a little bit more alarming than usual,” Meir said.
Some analysts also said that thinner volumes heading into the Thanksgiving holiday could contribute to bigger price swings, but that should not be viewed as significant.
Focus now turns to personal consumption data for October, a key metric watched by the Fed to gauge consumer spending strength, due at 10:00 a.m. ET (1500 GMT). Spot platinum rose 0.4% to $973.33 per ounce, while palladium was up 0.3% to $1,873.45. Silver fell 0.7% to $23.48. (Reporting by Asha Sistla and Arundhati Sarkar in Bengaluru; Editing by Aditya Soni)
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