This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gold Prices Pop on Weak GDP Report

Stocks in this article: NG AEM ABX GLD IAU KGC

NEW YORK ( TheStreet) -- Gold prices were popping Wednesday after a surprising contraction in U.S. gross domestic product pushed investors back into the safe-haven asset. Gold prices gained 0.48% on Tuesday.

Gold for April delivery was jumping $19.70 to $1,682.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,684 and as low as $1,663.50, while the spot price was adding $17.70, according to Kitco's gold index.

"I did not expect a negative number but ... gold is still kind of within its trading range," said Oliver Pursche, co-portfolio manager at GMG Defensive Beta Fund.

The Bureau of Economic Analysis reported Tuesday that fourth-quarter gross domestic product in 2012 contracted 0.1%, compared against third-quarter growth of 3.1%. The preliminary reading could later be upwardly revised, but the first print weakened confidence enough to sink major U.S. equity markets early on Wednesday.

Consensus among economists polled by Thomson Reuters were expecting GDP to rise 1.1%.

Silver prices for March delivery were increasing 82 cents to $32.01, while the U.S. dollar index was sinking 0.38% to $79.27.

Comex gold trades will settle at 1:30 p.m. EST, but the Federal Reserve will make a policy-making meeting announcement at 2:15 p.m.

Gold prices plummeted 1.5% on Jan. 4 when the Fed announced a split in sentiment among members of the Federal Open Market Committee as to how much longer the central bank should continue its monetary stimulus programs. Multiple members said they wanted to end quantitative easing by the end of 2013 or well before the end of the year. Others reiterated their commitment to considerable accommodative policy.

The fear among gold traders is that if the Fed ends its open-ended mortgage-backed securities and longer-term Treasuries purchases, then inflationary pressures would subside and damper the yellow metal's appeal.

"I do think that where a month ago ... there were some discussions about quantitative easing ending sooner rather than later and the economy picking up and thereby inflation picking up, you're kind of saying, 'Well, gee, that may not be quite so true as we felt two or three weeks ago," Pursche said.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs