Headline gross domestic product for the third quarter showed 3.6% growth, which was an upward revision from the prior reading of 2.8% and higher than economists' expectations of 3.1%, according to a Bloomberg survey.
Gold for February delivery at the COMEX division of the New York Mercantile Exchange was plummeting $30.20 to $1,217 an ounce. The gold price traded as high as $1,243.20. The spot price was falling $20.30 an ounce.
"There's no way I would bet against this trend now," Michael Smith, president of T&K Futures and Options, said in a phone interview. "I think we can break $1,000 [an ounce], no problem."Smith said it would take four or five more months for the price of gold to sink below $1,000, but his forecast does come in a year that has seen the metal lose more than 27% of its value and after the worst November performance for the asset since 1978. Wednesday saw an afternoon pop of more than $25 on a short-covering rally, which one trader told TheStreet would be short-lived. A decline in gold prices in recent months has come amid speculation that the Federal Reserve will curb its economic stimulus program. Market participants have viewed the program, known as quantitative easing, as an inflationary policy due to the Fed purchasing $85 billion of mortgage-backed securities and longer-term Treasuries every month. A lack of inflationary pressure combined with the prospect of the central bank slowing asset purchases have left gold without its investor appeal as an inflation hedge. Market participants, including billionaire hedge fund manager John Paulson, have been rotating out of the yellow metal and into stocks due to a more than 25% gain in the S&P 500 in 2013. If gold investors are looking for some optimistic information on Thursday, economists viewed the better-than-expected GDP report as underwhelming. A large part of the big beat in economic growth came on inventory growth. "When you take away the inventories it's basically another quarter of mediocre growth," said Steve Blitz, ITG's chief economist. "There's nothing in here in terms of the quarter itself that shows an acceleration in economic activity."
Adding pressure to the fall in gold prices was weekly jobless claims for the week ended Nov. 30 that came in stronger than economists' forecasts. Claims rose 298,000, far below expectations of 322,000. Silver prices for March delivery were sliding 56 cents to $19.28 an ounce, while the U.S. dollar index was off by 0.24% to $80.44. Gold mining stocks were mostly lower on Thursday. Shares of NovaGold Resources (NG) were dropping 4.7% to $2.24. Among volume leaders, Barrick Gold (ABX - Get Report) was down 0.57% to $15.59 a share. Gold ETF SPDR Gold Trust (GLD) was decreasing 1.9% to $117.70, while iShares Gold Trust (IAU) was off 1.9% to $11.83. -- Written by Joe Deaux in New York. >Contact by Email. Follow @JoeDeaux