Gold prices declined for the fourth straight session as equity markets and the US dollar continues to recover from “Black Monday”.
Gold for December delivery on the Comex division on the New York Mercantile Exchange fell $2.0 to close at $1,122.60 per ounce. Trade ranged from $1,117.0 to $1,128.50.
Gold prices rallied from multi-year lows to end last week as fears over a major slowdown in China finally crested.
US equities and dollar correspondly sunk to begin the week, aptly deemed “Black Monday” as the contagion in Asia spooked investors in the world’s largest economy.
Capital fled from all assets except US treasuries, demonstrating the lack of safe haven for gold – the yellow-metal is seen as a popular asset during major price fluctuations.
“Overall, from a precious perspective, I believe the rally we have seen recently was also overdone,” David Govett at Marex Spectron said. “With the market as short as it was, the move was somewhat inevitable and this fueled the rally rather than the concept of gold being a safe haven during times of turmoil.”
US preliminary GDP quarter-over-quarter for the second quarter jumped 3.7 percent, beating the forecast of 3.2 percent and above the previous reading of 2.3 percent.
Additionally, the preliminary GDP price index quarter-over-quarter was at 2.1 percent, above the estimate of two percent, while weekly initial jobless claims stood at 271,000, below estimates of 275,000 and under the psychological 300,000 mark.
“Good GDP data and better initial jobless claims bode well… and should help restore some confidence” in the US economy, FastMarkets head of research William Adams said.
US equities and the dollar responded favourably with the Dow Jones industrial average and the S&P last up 1.6 percent and 1.8 percent respectively. The dollar was 0.6 percent stronger at $1.1251 against the euro.
As for the other precious metals, Comex silver for September delivery was surged 31.4 cents at $14.355 per ounce. Trade has ranged from $14.050 to $14.560.
Platinum for October delivery on the Nymex rose $16.90 to $997.10 per ounce, while the most-actively traded palladium contract was at $564.20 per ounce, up $34.55.
(Editing by Tom Jennemann)
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