Gold fell in New York as investors weighed signs of an improving U.S. economy against tension over Ukraine.
The U.S. and European powers joined Ukraine in condemning what they said were incursions by Russia as the government in Kiev sought to counter an offensive by separatist rebels. U.S. President Barack Obama said Russia faces “more costs and consequences” and the European Union has called for threats of further sanctions on Russian President Vladimir Putin.
Gold added 0.4 percent this month, rebounding from a two- month low of $1,273.40 an ounce set Aug. 21, even as improving U.S. data supported the case for the Federal Reserve to raise borrowing costs sooner than forecast. Data released Thursday showed the U.S. economy expanded more than previously forecast in the second quarter. Other reports showed the outlook for home sales improved and consumer confidence climbed.
“For gold to move substantially higher, it has to see more turmoil in the Ukraine either in the way of a widening conflict, or barring that, additional sanctions being imposed,” Edward Meir, an analyst at INTL FCStone Inc. in New York, wrote in a note. Precious metals have “to grapple with a rapidly improving macro outlook out of the U.S., which carries with it the very real, and bearish, possibility that the Fed will have to move on rates sooner than it is saying.”
Gold for December delivery fell 0.3 percent to $1,286.60 by 7:29 a.m. on the Comex in New York. It reached $1,297.60 yesterday, the highest since Aug. 20. Bullion for immediate delivery lost 0.3 percent to $1,285.75 in London, according to Bloomberg generic pricing.
Futures trading volume was 37 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.
The Fed has reduced its monthly purchases of government and mortgage debt to $25 billion from $85 billion, and is on course to end the program this year.
Silver for December delivery fell 0.3 percent to $19.555 an ounce in New York, set for a 4.2 percent monthly loss.
Platinum for October delivery was little changed at $1,424.60 an ounce and is down 2.8 percent in August for a second monthly decline.
Palladium for December delivery was also little changed at $897.85 an ounce. It reached a 13-year high of $902.75 on Aug. 18 and with a 2.8 percent gain for August is heading for a seventh monthly advance, the longest such run since January 2011.
Russia is the biggest supplier of palladium. Prices climbed 25 percent this year as increased usage in catalytic converters, which curb harmful emissions in cars, and a five-month mine strike that ended in June in South Africa, the second-biggest producer, added to supply shortages.
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