Gold Plummets To End Below $1,200 On Upbeat Data, Fed Rate Outlook

(RTTNews) - Gold futures slipped to end at a near four-week low Thursday, on some upbeat data from the U.S. that showed the gross domestic product to have increased more than expected in the third quarter. The precious metal was also impacted by the Federal Reserve's move to end its asset buying program that also signaled a possible interest rate hike ahead of market forecast.

In some upbeat data from the U.S., economic activity in the country increased more than expected in the third quarter of 2014, a report from the Commerce Department showed Thursday. However, a Labor Department report showed first-time claims for U.S. unemployment benefits saw a more-than-expected increase in the week ended October 25.

After its two-day monetary policy meeting, the Federal Reserve announced the end of its monthly asset buying program, QE3, yesterday.

The Fed said interest rates may remain around record lows for a "considerable time," but added that rate hikes may happen sooner than markets expect if the economic recovery continues to gather steam. The Fed now believes under-utilization of labor resources to be gradually diminishing.

Gold for December delivery, the most actively traded contract, plunged $26.30 or 2.2 percent to settle at $1,198.60 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for December delivery scaled an intraday high of $1,216.50 and a low of $1,195.50 an ounce.

On Wednesday, gold futures ended lower ahead of the outcome of the U.S. Federal Reserve's monetary policy meet. While the dollar's weakness against major currencies supported gold, a positive trend in global equity markets weighed against it.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 742.40 tons on Thursday from its previous close of 743.59 tons on Wednesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 86.13 on Thursday, up from its previous close of 85.99 late Wednesday in North American trade. The dollar scaled a high of 86.49 intraday and a low of 85.99.

The euro trended lower against the dollar at $1.2613 on Thursday, as compared to its previous close of $1.2632 late Wednesday in North American trade. The euro scaled a high of $1.2639 intraday and a low of $1.2548.

In economic news from the U.S., data from the U.S. Labor Department showed initial jobless claims to have edged up to 287,000 in the week ended October 25th, an increase of 3,000 from the previous week's revised level of 284,000.

A report from the Commerce Department showed U.S. economic activity to have increased by more than expected 3.5 percent in the third quarter of 2014, compared to the 4.6 percent growth seen in the second quarter. Economists had expected GDP to climb by 3.0 percent.

Meanwhile, survey results from European Commission show eurozone economic confidence to have picked up in October from a 10-month low. The economic confidence index rose unexpectedly to 100.7 in October from 99.9 in the prior month. The score was expected to fall to 99.7.

Germany's unemployment declined unexpectedly in October, suggesting an improvement in the labor market conditions despite weak economic developments. The number of people out of work decreased by 22,000 to 2.887 million in October, data from the Federal Labor Agency revealed Thursday. Economists had forecast an increase of 4,000.

Germany's EU measure of inflation unexpectedly slowed in October after holding steady in the previous two months, preliminary estimates from Destatis showed Thursday. The harmonized index of consumer prices rose 0.7 percent annually following 0.8 percent increase in each of the previous three months. Economists had forecast a higher figure of 0.9 percent.