Gold futures fell for the second straight day as the U.S. economy expanded more than estimated, crimping demand for the precious metal as an alternative investment.
The price dropped 2.2 percent last week on concern that the Federal Reserve will boost interest rates next year. Traders predict a 69 percent chance that the central bank will raise borrowing costs by September, futures data show. The U.S. economy expanded at a 5 percent annual rate in the third quarter, the biggest advance in 11 years.
The GDP report sent the Dow Jones Industrial Average to a record high. Gold is heading for a consecutive annual loss for the first time since 1998 after a plunge in oil prices reduced the metal™s appeal as an inflation hedge. The dollar™s rally against a basket of 10 currencies to a five-year high cut demand for bullion as a store of value.
Gold futures for February delivery fell 0.2 percent to settle at $1,178 an ounce at 1:43 p.m. on the Comex in New York. Yesterday, the price dropped 1.4 percent, the biggest decline for a most-active contract since Dec. 5. Today, aggregate trading was 39 percent below the 100-day average for this time, according to data compiled by Bloomberg.