May 29 (Bloomberg) -- Gold futures reached a 16-week low in New York amid speculation that the U.S. will rebound from its winter slowdown.
The American economy contracted for the first time in three years from January through March, a government report on gross domestic product showed today. Federal Reserve policy makers said at their April meeting that growth has strengthened after adverse weather took its toll. Fewer Americans than forecast filed applications for unemployment benefits last week.
Bullion tumbled 28 percent last year on expectations that the Fed would cut debt buying as the economy accelerates. Assets in global exchange-traded funds backed by gold are near the smallest since 2009, and money managers have cut their bets on a rally by about a third since this year’s peak in March.
“People will largely discount the GDP number because of the harsh winter,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “The sentiment towards gold will remain bearish as the economy has been doing better this quarter.”
Gold futures for August delivery slipped 0.2 percent to settle at $1,257.10 an ounce at 1:51 p.m. on the Comex in New York, after touching $1,251.40, the lowest since Feb. 4.
This year, prices have climbed 4.6 percent after Russia annexed the Crimean peninsula in March, followed by deadly clashes between pro-separatists and government forces in nearby eastern regions of Ukraine. European Union leaders meeting in Brussels on May 27 decided to put off further sanctions on Russia after President Vladimir Putin showed a willingness to work with Ukraine’s new leader and pulled back some troops from the border.
“The background support from Ukraine seems to be fading,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co. in Shanghai.
Silver futures for July delivery retreated 0.2 percent to $19.014 an ounce in New York, the fourth straight decline.
On the New York Mercantile Exchange, palladium futures for June delivery slipped 0.7 percent to $834.50 an ounce. Yesterday, the metal reached $845, the highest since Aug. 1, 2011.
The price has climbed 16 percent this year as a strike at mining companies crippled production in South Africa, the world’s biggest producer after Russia.
Platinum futures for July delivery fell 0.2 percent to $1,460.10 an ounce on the Nymex.
--With assistance from Phoebe Sedgman in Melbourne, Glenys Sim in Singapore and Nicholas Larkin in London.