By Ira Iosebashvili
Gold prices shuffled between gains and losses Tuesday, as two
sets of data gave varying reports on the U.S. economy.
Gold for December delivery, the most actively traded contract,
was recently up 0.2% at $1,198.80 a troy ounce on the Comex
division of the New York Mercantile Exchange. Prices had fallen to
$1,189 a troy ounce earlier in the session.
U.S. growth in the three months ended Sept. 30 was stronger than
previously estimated, showing that the economy sits on a solid
foundation despite increasing global uncertainty. The U.S. gross
domestic product expanded 3.9% in the period, surpassing the
Commerce Department's previous forecast of 3.5% growth and
analysts' expectations of 3.3%. A stronger U.S. economy raises
expectations that the Federal Reserve may need to tighten monetary
policy sooner than expected, a move that would hurt gold, which
yields nothing and struggles to compete with other investments when
interest rates rise.
The higher-than-expected growth also boosted the dollar, making
gold, which is priced in the U.S. currency, more expensive to
foreign buyers and further weighing on the metal's price.
"We have a strong dollar, a strong stock market, and you get a
zero-percent return holding gold," said James Cordier, president at
Liberty Trading Group. "People would rather put their money
somewhere else."
A later report, however, showed consumer confidence in November
running below expectations. The data, which covers a more recent
period than the gross domestic product numbers from earlier in the
day, suggested an unexpected speed bump in the country's economic
recovery and helped gold prices.
Meanwhile, prices for palladium and platinum turned higher,
after Johnson Matthey, a specialty chemicals maker that is one of
the world's largest platinum buyers, said Monday that markets for
the two metals look set to show their largest deficits since
records began 30 years ago. Johnson Matthey expects demand to
exceed production this year of 1.133 million ounces in platinum and
1.62 million ounces in palladium, analysts said.
Supplies of the metals have been depleted by a strike in South
Africa during the first half of the year, as well as dwindling
shipments from Russia. Burgeoning auto sales in the U.S. and Europe
have accelerated demand for the metals, which are primarily used in
automotive exhaust filters.
Platinum rose 0.9% to $1,218.20 a troy ounce, while palladium
gained 1.1% to $798.70 a troy ounce.
Write to Ira Iosebashvili at ira.iosebashvili@wsj.com
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