Gold holds up
Gold rose yesterday, notching up to its second week of gains after shrugging off slightly better-than-expected U.S. third-quarter GDP data amid firm demand from Asia. Spot gold was up 0.3 percent to $1,271.90 an ounce at 1445 GMT and is up 0.5 percent this week. US gold futures slipped 0.2 percent to $1,267.10. The US economy grew by 2.9 percent in the third quarter, outpacing analysts’ consensus forecast of 2.5 percent, strengthening the case for an interest rate increase and making non-yielding assets such as gold less attractive while boosting the dollar and US treasuries.
The reading of the world’s biggest economy dragged gold to a session low of $1,262.04 but the price rebounded shortly after. “The GDP data was not overwhelmingly strong, the rise was marginal and the contribution to underlying strength wasn’t very strong,” said Carsten Fritsch, commodity analyst at Commerzbank. “The fact that we have strong physical demand probably puts a floor to the price.”
Demand for bullion in India is expected to pick up during the Dhanteras and Diwali festivals, when gold is traditionally given as a gift. The dollar index, which measures the greenback against a basket of currencies, strengthened briefly following the US data but then drifted 0.25 percent lower to 98.618. US interest rate futures are implying a near 80 percent chance of the US Federal Reserve raising rates by December, according to the CME Group’s FedWatch tool.