By Tatyana Shumsky
After making some wild swings in response to stronger U.S.
economic growth and employment data, gold prices moved lower
Wednesday amid investor caution ahead of the Federal Reserve
monetary policy statement.
Gold for December delivery, the most actively traded contract,
was recently trading down $2.40, or 0.2%, at $1,298.10 a troy ounce
on the Comex division of the New York Mercantile Exchange.
Gold prices fell to a session low of $1,293.20 an ounce after
data showed the U.S. economy expanded at a seasonally adjusted
annualized rate of 4% in the second quarter. This beat economists'
forecast of 3% growth for the period.
The upbeat reading was bad news for gold bugs, as stronger
growth paves the way for the Fed to wind down its stimulus efforts
and begin raising interest rates. Gold has no yield and is likely
to struggle when interest rates are higher because other haven
assets, like Treasury bonds, can offer better returns.
"We could see more aggressive Fed action with interest rates,"
said Bob Haberkorn, a senior commodities broker with RJO Futures in
Chicago.
Private-sector jobs rose by 218,000 from June to July, according
to an employment report released Wednesday morning by Moody's
Analytics and payrolls processor Automatic Data Processing Inc.
But the data also fueled inflationary fears, which prompted some
investors to pile back into gold, helping lift futures to a session
high of $1,305.20 an ounce.
"It's more people working, more people spending," said George
Gero, senior vice president with RBC Capital Markets Global
Futures.
Some market watchers have worried that the central bank isn't
paying enough heed to inflation, and that policy efforts will lag
flyaway prices. Gold is considered by some traders as a hedge
against inflation because the precious metal tends to keep its
value better than other assets.
In midmorning trade, gold had resumed its slide ahead of the
Federal Open Market Committee monetary policy statement, due out at
2 p.m. EDT.
Write to Tatyana Shumsky at tatyana.shumsky@wsj.com