(For more on the gold bear market, see EXT5.)
Aug. 30 (Bloomberg) -- Gold fell, paring a second straight monthly gain, on bets that an improving U.S. economy will support the case for the Federal Reserve to curb its stimulus.
The U.S. grew faster than analysts forecast in the second quarter, expanding 2.5 percent, up from an initial estimate of 1.7 percent, the Commerce Department said yesterday. Quicker expansion may allow the Fed to trim its bond-buying plan, lowering the appeal of bullion as a hedge against inflation. Gold also fell after U.K. lawmakers rejected a motion for military action against Syria, reducing demand for precious metals as a haven asset.
“Many believe that the Fed will announce changes to its stimulus policy in September,” Peter Hug, the global trading director of Kitco Metals Inc., in Montreal, said in a report. “Notions of an imminent U.S. military attack on Syria have receded significantly in the past 48 hours, putting pressure on gold.”
Gold futures for December delivery fell 1.2 percent to settle at $1,396.10 an ounce at 1:39 p.m. on the Comex in New York. Prices reached $1,434 on Aug. 28, the highest since May 14, amid concern that the U.S. and its allies will attack Syria.
A U.S. intelligence assessment has concluded with “high confidence” that the Syrian regime carried out a chemical attack that killed 1,429 people earlier this month, Secretary of State John Kerry said at the State Department as the four-page report was released.
Bullion climbed 6.3 percent in August, the second straight gain, and the longest rally since September. Prices have rebounded since reaching a 34-month low of $1,179.40 in June as the rout attracted consumers of coins, bars and jewelry.
Gold has fallen 17 percent this year as some investors lost faith in the metal as a store of value and on speculation that the Fed will reduce stimulus. Officials will cut debt purchases at their next meeting on Sept. 17-18, according to 65 percent of economists in an Aug. 9-13 Bloomberg survey.
Holdings in exchange-traded products backed by bullion added 2.6 metric tons so far this week to 1,954.6 tons, heading for a third straight week of increases, data compiled by Bloomberg show.
Silver futures for December delivery slumped 2.6 percent to $23.513 an ounce in New York, the biggest drop since July 5. Prices surged 20 percent this month, marking the biggest rise since April 2011. Assets in ETPs backed by the metal reached a record 20,080.9 tons yesterday and are up 6.2 percent this year.
Platinum futures for October delivery added 0.3 percent to $1,527.10 an ounce on the New York Mercantile Exchange. Prices advanced 6.8 percent this month, the biggest gain since January. Palladium futures for December delivery fell 2.2 percent to $723.85 an ounce on the Nymex, extending the week’s loss to 3.6 percent and pushing prices 0.3 percent down for the month.
--Editors: Thomas Galatola, Millie Munshi