Gold Prices Fall After Rosy Read on U.S. Consumer Spending

By Amrith Ramkumar and David Hodari Features Dow Jones Newswires

Gold prices fell after Commerce Department data showed U.S. consumers spent steadily in October as their incomes rose, suggesting the economy will deliver another quarter of strong growth.

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Gold for February delivery fell 0.3% to $1,282.40 a troy ounce Thursday on the Comex division of the New York Mercantile Exchange.

Prices of the haven asset have retreated since hitting $1,300 -- a crucial technical and psychological level for many investors -- earlier in the week, weighed down by economic data that analysts said should keep the Federal Reserve on track to gradually raise interest rates. The precious metal struggles to compete with yield-bearing assets such as Treasurys as borrowing costs rise.

Thursday's data showed personal spending increased 0.3% in October from a month earlier. Personal-consumption expenditures, the Federal Reserve's preferred inflation gauge, rose 0.1%, the smallest gain since July. In the 12 months through October, overall prices rose 1.6%, down from September's annual rate of 1.7%.

Although inflation remains below the Fed's 2% target, the robust spending figure and recent gross domestic product growth likely mean the Fed will next raise rates in December, investors and analysts said.

"The anticipated rise in December is essentially baked in," said Jason Lejonvarn, a managing director at Mellon Capital. "The only real debate is whether the Fed is going to have two or three rate rises in 2018," he said.

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Some analysts have said clues to the Fed's plans could also swing gold prices toward the end of the year. They are roughly 5% off their year-to-date highs from early September.

Many investors have been monitoring the dollar's movements as Senate Republicans debate a tax-overhaul bill. As a dollar-denominated commodity, gold becomes more expensive for overseas buyers when the U.S. currency appreciates. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, fell 0.3% Thursday.

Even with the dollar's decline, continued gains in U.S. stocks and other risky assets have also been a negative for gold and other havens that investors favor when markets turn rocky, some analysts have said.

"You're looking at a pretty rosy scenario in terms of risky assets," Mr. Lejonvarn said. "The headwinds for gold are blowing pretty strong these days."

Among base metals, copper for March delivery rose 0.4% to $3.0820 a pound. The industrial metal was on track to snap a three-session losing streak after data showed activity in China's critical manufacturing sector picked up in November. Concerns over possible slowing demand from China, the world's largest metals consumer, have pulled copper off its three-year highs in recent sessions.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

Gold prices fell after Commerce Department data showed U.S. consumers spent steadily in October as their incomes rose, suggesting the economy will deliver another quarter of strong growth.

Gold for February delivery fell 0.7% to $1,276.70 a troy ounce Thursday on the Comex division of the New York Mercantile Exchange.

Prices of the haven asset have retreated since hitting $1,300 -- a crucial technical and psychological level for many investors -- earlier in the week, weighed down by economic data that analysts said should keep the Federal Reserve on track to gradually raise interest rates. The precious metal struggles to compete with yield-bearing assets such as Treasurys as borrowing costs rise.

Thursday's data showed personal spending increased 0.3% in October from a month earlier. Personal-consumption expenditures, the Federal Reserve's preferred inflation gauge, rose 0.1%, the smallest gain since July. In the 12 months through October, overall prices rose 1.6%, down from September's annual rate of 1.7%.

Although inflation remains below the Fed's 2% target, the robust spending figure and recent gross domestic product growth likely mean the Fed will next raise rates in December, investors and analysts said.

"The anticipated rise in December is essentially baked in," said Jason Lejonvarn, a managing director at Mellon Capital. "The only real debate is whether the Fed is going to have two or three rate rises in 2018," he said.

Some analysts have said clues to the Fed's plans could also swing gold prices toward the end of the year. They are roughly 5% off their year-to-date highs from early September.

Many investors have been monitoring the dollar's movements as Senate Republicans debate a tax-overhaul bill. As a dollar-denominated commodity, gold becomes more expensive for overseas buyers when the U.S. currency appreciates. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, fell 0.1% Thursday.

Even with the dollar's decline, continued gains in U.S. stocks and other risky assets have also been a negative for gold and other havens that investors favor when markets turn rocky, some analysts have said.

"You're looking at a pretty rosy scenario in terms of risky assets," Mr. Lejonvarn said. "The headwinds for gold are blowing pretty strong these days."

Among base metals, copper for March delivery swung between small gains and losses and closed down 0.1% at $3.0640 a pound in a fourth straight session of losses. The industrial metal fell even after data showed activity in China's critical manufacturing sector picked up in November. Concerns that demand from China, the world's largest metals consumer, will slow, have pulled copper off its three-year highs in recent sessions.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

November 30, 2017 14:45 ET (19:45 GMT)