(RTTNews) - Gold prices turned sharply lower on Thursday as the dollar gained and crude oil fell. December gold closed at $738.50, down $15.50 for the session. Gold touched as high as $778.30 in the early morning before dropping as low as $738.10.
The greenback turned higher against other major currencies, cutting into gold's hedge value. The dollar backed off a nine-day high against the euro and also climbed against the sterling. Gold usually moves in the opposite direction as the dollar.
On the economic front, a U.S. Commerce Department report showed that GDP fell by 0.3 percent in the third quarter compared to the 2.8 percent growth that was seen in the second quarter. Economists had been expecting a slightly more significant decrease of about 0.5 percent.
Meanwhile, a Department of Labor showed that jobless claims came in at 479,000, unchanged from the previous week's revised figure of 479,000. Economists had expected jobless claims to edge down to 473,000 from the 478.000 originally reported for the week ended October 18th.
Gold's hedge appeal was further diminished as crude oil dropped after earlier reaching above $70 a barrel. Light sweet crude closed at $65.96, down $1.54 on the session.
Metal traders had their first chance to react to the latest Federal Reserve interest rate cut. Wednesday afternoon, the Fed cut its benchmark interest rate by half a percentage point on Wednesday to 1 percent - its lowest level since June of 2004. The vote by the FOMC was unanimous and the decision came in-line with the expectations of most market players.
At the pump, regular unleaded gasoline prices dropped to $2.547 on average, according to AAA's daily fuel gauge. This is down another 4 cents from $2.589 the day before. A year ago, prices were at $2.899.
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