Gold Drops as U.S. Growth Signs Fuel Concern Fed to Cut Stimulus
Gold fell for the third time in four days as signs of a rebounding U.S. economy revived concern that the Federal Reserve will scale back monetary stimulus, eroding the appeal of the precious metal as a store of value.
Orders for durable goods increased more than forecast in April by 3.3 percent, the Commerce Department said today. Economists in a Bloomberg survey expected a 1.5 percent increase. Fed Chairman Ben S. Bernanke said May 22 that the central bank may slow the $85 billion a month of Treasury and mortgage debt purchases if the economy shows sustained signs of improvement. Gold has declined 17 percent this year.
“Today’s data is good and another reason for the Fed to think about ending the stimulus,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
Gold futures for June delivery fell 0.4 percent to settle at $1,386.60 an ounce at 1:35 p.m. on the Comex in New York. Prices are down 5.8 percent in May, heading for a second straight decline.
Gold tumbled into a bear market in April as some investors lost faith in the metal as a store of value and amid concern that the Fed may scale back stimulus. Bank of Japan Governor Haruhiko Kuroda said today the central bank had announced sufficient monetary easing.
Holdings in exchange-traded products dropped 3.8 metric tons to 2,164.8 tons yesterday, the lowest since July 2011, according to data compiled by Bloomberg.
Silver futures for July delivery lost 0.1 percent to $22.496 an ounce in New York. The precious metal has plunged 26 percent this year, the worst performer in the Standard & Poor’s GSCI gauge of 24 commodities.
On the New York Mercantile Exchange, palladium futures for June delivery retreated 1.7 percent to $726.45 an ounce. Prices dropped 1.9 percent this week, ending a four-week advance.
Futures trading volume was more than double the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Platinum futures for July delivery slid 0.4 percent to $1,451.90 an ounce, extending the week’s drop to 1.1 percent.
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