Investing.com - Gold prices dropped on Thursday after robust U.S. gross domestic product data cemented market expectations for the Federal Reserve to continue dismantling stimulus programs, which fueled demand for the dollar.
Gold and the greenback tend to trade inversely with one another.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,243.50 a troy ounce during U.S. trading, down 1.48%, up from a session low of USD1,237.90 and off a high of 1,269.90.
The April contract settled down 0.94% at USD1,262.20 on Wednesday.
Futures were likely to find support at USD1,231.30 a troy ounce, the low from Jan. 23, and resistance at USD1,270.10, Wednesday''s high.
The dollar rallied after the Commerce Department said gross domestic product expanded 3.2% in the three months to December, in line with most forecasts, even outpacing some, following a 4.1% rise in the third quarter.
Consumer spending rose by 3.3%, the strongest since the fourth quarter of 2010, exports grew by 11.4%, while government consumption shrank, which drew praise from markets.
The data strengthened the dollar by keeping expectations firm for the Federal Reserve to continue trimming its monthly bond-buying program, which weakens the greenback pushing down long-term interest rates, thus making gold an attractive hedge.
On Wednesday, the Fed said it was cutting the program to USD65 billion a month from USD75 billion.
The program launched in 2012 at USD85 billion in monthly purchases of Treasury and mortgage debt.
Elsewhere on Thursday, the Labor Department said the number of individuals filing for unemployment assistance in the U.S. last week rose by 19,000 to 348,000 from the previous week’s revised total of 329,000.
Analysts were expecting the figure to remain relatively unchanged at 330,000, though investors shrugged off the data.
Separately, the National Association of Realtors said its pending home sales index dropped by a seasonally adjusted 8.7% last month, disappointing expectations for a 0.3% gain, which also failed to dampen spirits.
Rough winter weather has taken its toll on recent economic indicators, though general market attitudes persist that U.S. recovery remains on track.
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Meanwhile, silver for March delivery was down 2.10% and trading at USD19.142 a troy ounce, while copper futures for March delivery were down 0.41% and trading at USD3.227 a pound.