Gold futures reached a 16-week low in New York amid speculation that the U.S. will rebound from its winter slowdown.
The American economy contracted for the first time in three years from January through March, a government report on gross domestic product showed today. Federal Reserve policy makers said at their April meeting that growth has strengthened after adverse weather took its toll. Fewer Americans than forecast filed applications for unemployment benefits last week.
Bullion tumbled 28 percent last year on expectations that the Fed would cut debt buying as the economy accelerates. Assets in global exchange-traded funds backed by gold are near the smallest since 2009, and money managers have cut their bets on a rally by about a third since this year’s peak in March.
“People will largely discount the GDP number because of the harsh winter,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “The sentiment towardsgold will remain bearish as the economy has been doing better this quarter.”
Gold futures for August delivery slipped 0.4 percent to $1,254.10 an ounce at 8:53 a.m. on the Comex in New York, after touching $1,251.40, the lowest since Feb. 4.
Trading was 34 percent more than the average for the past 100 days for this time of day, according to data compiled by Bloomberg.
Through yesterday, prices climbed 4.8 percent this year after Russia annexed the Crimean peninsula in March, followed by deadly clashes between pro-separatists and government forces in nearby eastern regions of Ukraine. European Union leaders meeting in Brussels on May 27 decided to put off further sanctions on Russia after President Vladimir Putin showed a willingness to work with Ukraine’s new leader and pulled back some troops from the border.
“The background support from Ukraine seems to be fading,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co. in Shanghai.