Gold futures fell, trimming the biggest weekly gain in 15 months, as the U.S. economy expanded less than forecast, driving commodities lower and crimping demand for the precious metal as a hedge against inflation.
Gross domestic product rose at a 2.5 percent annual rate, Commerce Department figures showed today. The median estimate of 86 economists surveyed by Bloomberg called for a 3 percent gain. This week, gold jumped 4.2 percent, the most since late January 2012, as demand for coins, bars and jewelry surged following last week’s plunge in futures. The Standard & Poor’s GSCI index of 24 raw materials slumped as much as 1.1 percent, led by industrial metals.
“Inflation is one thing you do not have to worry about if the world’s largest economy is struggling and instead the concern should be deflation,” Michael Gayed, the chief investment strategist at New York-based Pension Partners LLC, which advises on $190 million in assets, said in a telephone interview. “And when you have a rally like the one we saw in gold, there is bound to be some profit-taking.”
Gold futures for June delivery declined 0.6 percent to settle at $1,453.60 an ounce at 1:38 p.m. on the Comex in New York. Prices earlier rose as much as 1.6 percent, mainly on increased physical buying.
On April 15, futures plummeted 9.3 percent, the most in 33 years. On the following day, the price touched $1,321.50, the lowest in 26 months. Since then, the metal has climbed 10 percent.
In China, gold buyers were hoarding the metal and demand is “strong” in Dubai, Bernard Sin, the head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said by e-mail today.
Investors cut assets in gold-backed exchange-traded products to 2,294.5 metric tons yesterday, the lowest since October 2011, data compiled by Bloomberg showed.
Silver futures for July delivery fell 1.6 percent to $23.788 an ounce on the Comex. The metal has tumbled 21 percent this year, the worst performer on the S&P GSCI index.
Trading was 50 percent higher than the average in the past 100 days for this time of day for gold and was almost triple for silver, according to Bloomberg data.
On the New York Mercantile Exchange, platinum futures for July delivery climbed 0.8 percent to $1,476.50 an ounce. This week, the price advanced 3.7 percent, the most in three months.
Palladium futures for June delivery rose 0.1 percent to $681.95 an ounce, the second straight gain. The metal has dropped 3 percent this year.