Gold Prices Give Up Ground

Gold prices slid again Wednesday as new data showed the economy grew at a better-than-expected rate in the first quarter and the bullion exchange-traded funds dumped their holdings.

Benchmark bullion futures were down $6.80 at $870 an ounce in recent action on the Comex division of the New York Mercantile Exchange.

"The recent selloff in gold may turn out to be the first ever ETF-led correction," writes John Reade, a metals strategist at UBS in London. The introduction of bullion funds in the first half of the decade is credited with easing the process of investing in gold for individuals and institutions alike. Prior to that, the process of buying bullion was considered cumbersome and administratively heavy.

Holdings of gold by streetTracks Gold Shares(GLD Quote - Cramer on GLD - Stock Picks) the largest of the ETFs that hold bullion, dropped another 11 tons Tuesday to 580 tons. As recently as mid-March the fund owned over 660 tons.

Investors tend to buy gold in times of economic uncertainty and so the news that the U.S. economy may not be faring as badly as previously thought likely led to a decrease in demand for the metal.

As for the currency market, the euro was buying $1.5568, up from $1.5561 on Tuesday. The British pound was rallying to $1.9804 from $1.9675 previously. The yen, meanwhile, fell to 104.40 from 103.98 against the U.S. currency.

The CurrencyShares Euro Trust(FXE Quote - Cramer on FXE - Stock Picks) was steady, while the CurrencyShares Japanese Yen Trust(FXY Quote - Cramer on FXY - Stock Picks) was down 0.3%.

The CurrencyShares British Pound Sterling(FXB Quote - Cramer on FXB - Stock Picks) was up 1%.