Gold slid as stability in stock markets and a stronger dollar left less investor appetite for the safe-haven asset. Gold for April delivery, the most actively traded contract, decreased $19.70, or 1.6%, to establish at $1,242.50 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold had boosted to a near-nine-week high on Wednesday as renewed turmoil in emerging markets sent global stock markets into retreat. Some investors purchase gold as an alternative to assets like stocks and bonds amid economic uncertainty. But Thursday data showing U.S. growth accelerated late last year, along with the Federal Reserve’s decision to hold to its stimulus rollback, sapped investor interest in gold and other perceived safe havens on Thursday. “You saw that safe-haven demand walking back into gold recently, but the markets have a bit of a reprieve from those concerns,” said Dave Meger, director of metals with Vision Financial Markets.
The Federal Reserve said after the close of regular gold trading late Wednesday it would keep going to cut the pace of its bond purchases. The Fed’s bond-buying effort had been a key support for gold prices in recent years as investors sought the metal as a hedge towards the inflation that could follow the central bank’s stimulus.
Gold was also pressured as the dollar increased after the Fed’s decision, and economic data showed the U.S. economy remains on relatively firm footing. The U.S. economy enlarged at a steady clip in the fourth quarter, growing at a seasonally adjusted rate of 3.2%, the Commerce Department said Thursday.
Gold and the dollar tend to move inversely. A weaker greenback makes dollar-denominated gold futures appear cheaper for buyers using other currencies, and some traders use gold as a hedge towards a declining dollar. Meanwhile, platinum steep fall in price on Thursday, tracking gold prices in spite of the rejection of an offer that would have finished a strike restricting production from the top producer. South Africa’s platinum mine workers rejected a fresh wage offer from mining companies on Thursday, vowing to continue a strike that brought the sector to a standstill since it started late last week.
Platinum for April delivery, the most actively traded contract, dropped 1.5% to $1,387.60 a troy ounce on the Nymex. “There have been positive developments” in the standoff between the Association of Mineworkers and Construction Union and government and corporate leaders, but no resolution, said Walter de Wet, an analyst with Standard Bank. “Of course, if AMCU accepts the wage offer from mines tomorrow, platinum will be vulnerable” to further losses.