Gold futures capped the longest slump in four weeks after a report showed the U.S. economy in the first quarter contracted less than estimated, supported by a bigger gain in consumer spending.
Gross domestic product fell at a 0.2 percent annualized rate, revised from a 0.7 percent drop, government data showed Wednesday. Household consumption grew at a 2.1 percent rate, up from the estimate of 1.8 percent. After the report, gold dropped as much as 0.7 percent to $1,168.10 an ounce, a two-week low.
The metal has slumped this week as the odds increased that the Federal Reserve will boost its benchmark interest rate following gains in the U.S economy. On Tuesday, government data showed purchases of new homes jumped the most in seven years, while a gold put giving owners the right to sell July futures at $1,175 surged 52 percent.
“The economy has recovered, and there’s just not a compelling reason to buy gold,” Fain Shaffer, the president at Infinity Trading Corp. in Chicago, said in a telephone interview. He cited the data on personal consumption and new-home sales.
Gold futures for August delivery dropped 0.3 percent to $1,172.90 at 1:43 p.m. on the Comex in New York, a fourth straight decline and the longest slump since May 27.
Aggregate trading was about 5 percent above the 10-day average for this time, according to data compiled by Bloomberg. Almost 9,600 contracts traded shortly after the GDP report at 8:30 a.m.
The dollar also headed for the longest rally in a month against a basket of 10 major currencies, eroding the appeal of gold as an alternative investment. Higher interest rates curb the appeal of the metal, which doesn’t pay interest like assets including bonds.
Gold advanced last week on demand for a haven amid the impasse between Greece and its creditors.
On Tuesday, global holdings in exchange-traded products backed by gold fell less than 0.1 percent. The assets climbed in the previous five sessions, the longest advance since April.
Silver futures for September delivery rose 0.7 percent to $15.89 an ounce. Yesterday, the price touched $15.70, the lowest for a most-active contract since April 24.
Silver has slumped 25 percent in the past 12 months, while gold dropped 11 percent.
Platinum futures for October delivery added 0.6 percent to $1,074.50 an ounce on the New York Mercantile Exchange, rising for the fourth time in five sessions. Palladium futures for September delivery slipped less than 0.1 percent to $695.70 an ounce.