Gold Prices Claw Higher after Nearly 4% Thrashing

Gold prices rose Thursday, with investors stepping in after a nearly 4% drop to multiyear lows in the previous session.

Gold for August delivery GCQ3 +0.45%  rose $10.50, or 0.9%, to $1,239.80.

The contract on Wednesday slid $45.30, or 3.6%, to $1,229.80 an ounce, the lowest close for a most-active contract since August 2010, according to FactSet. The front-month silver contract also finished Wednesday with its lowest settlement level since August 2010, ending at $18.59 an ounce.

Silver for July delivery on Thursday SIN3 +0.53%  picked up 20 cents, or 1.1%, to $18.79 an ounce.

Both gold and silver on Wednesday had seen “weak-handed long liquidation and technical short-selling in the futures markets due to several factors,” wrote Kitco Metals global trading director Peter Hug to clients, “including ideas the U.S. economy is getting strong enough that the Federal Reserve will begin to scale back its monetary stimulus program.”

Better-than-expected readings on two separate housing reports this week bolstered the Fed’s assertion that it may pare down bond buys of $85 billion a month by as early as this year if the economy improves in line with its forecasts.

Monetary stimulus from the Fed and other central banks have been cited as supporting gold’s rally in recent years.

Next up for investors will be data Thursday on U.S. consumer spending in May and a report on weekly initial claims for unemployment benefits. The reports are due at 8:30 a.m. U.S. Eastern time.

Economists polled by MarketWatch expect consumer spending to rise 0.3%, with incomes rising a slightly lesser 0.2% in May.

Gold prices on Wednesday managed to find slight relief from selling pressure after the Commerce Department said first-quarter U.S. gross domestic product expanded at an annualized rate of 1.8%, lower than an earlier estimate of 2.4%.

A recent climb in Treasury yields has also made gold and other commodities less attractive because they pay no coupon, analysts have said. Yields on Wednesday, however, posted their first decline in eight sessions. The yield on the 10-year Treasury note 10_YEAR -0.55% , which moves inversely to price, fell 7 basis points to 2.541%.

Elsewhere in the metals complex Thursday, July copper HGN3 +0.92%   rose 1 cent, or 0.5%, to $3.06 a pound, and September palladium PAU3 +1.78%  climbed $9.60, or 1.5%, to $642.75 an ounce.

July platinum PLN3 +1.45%  moved up $18.50, or 1.4%, to $1,322.20 an ounce. Platinum’s close on Wednesday at $1,303.70 an ounce was the lowest finish for a front-month contract since September 2009.

Source: Market Watch