Gold falls sharply as US dollar rallies

Chicago  : Gold futures on the COMEX division of the New York Mercantile Exchange posted more than one percent losses on Wednesday as the US dollar rallied.

The most active gold contract for June delivery fell $17.9, or 1.33 per cent, to settle at $1330.00 per ounce.

The US dollar index, a measure of the dollar against a basket of other major currencies, rebounded by 0.52 per cent to 89.80 as of 1636 GMT, Xinhua reported.

The dollar was boosted by the news that US economic growth slowed less than previously estimated in the fourth quarter of 2017, as the US Commerce Department revised its third GDP growth rate earlier Wednesday.

Accordingly, the gross domestic product expanded at a 2.9 per cent annual rate in the final three months of 2017, up from the previously reported 2.5 per cent.

Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, priced in US dollar, becomes more expensive for investors using other currencies.

Meanwhile, the Dow Jones Industrial Average rose 147.02 points, or 0.62 per cent to 24,004.73 as of 1646 GMT. The rise of equities also pressured gold futures.

On geopolitical front, the recent commitment expressed by Pyongyang to denuclearisation on the Korean Peninsula has eased the tension and decreased the safe-haven appeal for gold, said analysts.

As for other precious metals, silver for May delivery went down 28.8 cents, or 1.74 per cent, to settle at $16.253 per ounce. Platinum for July fell $11.60, or 1.22 per cent, to close at $940.80 per ounce.