Forexpros – Gold futures turned lower in thin year-end trade on Thursday, as the U.S. dollar gained following the release of data showing U.S. economic growth was slower than previously estimated in the third quarter, while sustained concerns over the debt crisis in the euro zone also weighed.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,608.15 a troy ounce during U.S. morning trade, shedding 0.34%.
It earlier rose by as much as 0.35% to trade at a daily high of USD1,618.55 a troy ounce.
Gold futures were likely to find short-term support at USD1,595.45 a troy ounce, the low of December 20 and resistance at USD1,643.65, Wednesday’s high.
Trading volumes were expected to remain light ahead of the Christmas holiday weekend, as many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
The U.S. Bureau of Economic Analysis said earlier that gross domestic product increased at a seasonally adjusted annual rate of 1.8% during the third quarter, down from a previous estimate of 2.0%.
The data primarily reflects a downward revision to personal consumption, which grew 1.6% compared to a previous estimate of 2.3%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
A separate report showed that the number of individuals filing for initial jobless benefits last week fell by 4,000 to 364,000, the lowest since April 2008. Analysts had expected jobless claims to rise by 7,000 to 375,000 last week.
Risk sentiment remained fragile as concerns persisted over the potential effects of the European Central Bank’s unprecedented EUR489.19 billion three-year loan operation on Wednesday, intended to avoid a credit crunch in the euro zone.
Markets were hoping the move would help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the euro zone.
Meanwhile, investors were eyeing a joint press conference from ECB President Mario Draghi and Bank of England Governor Mervyn King in Frankfurt later in the day following a meeting of the European Systemic Risk Board.
For much of the last year, investors’ typical reaction to bad news from Europe was to buy gold, as it boosts the safe haven appeal of the precious metal, but that relationship has unraveled recently.
Instead, gold futures have moved largely in line with other commodities and risk-sensitive assets over the past month, with investors preferring the U.S. dollar and U.S. Treasuries as their safe havens of choice.
Elsewhere on the Comex, silver for March delivery dipped 0.05% to trade at USD29.23 a troy ounce, while copper for March delivery rose 0.6% to trade at USD3.415 a pound.
Forexpros
