Investing.com – Gold prices fell sharply on Wednesday as traders fled the precious metal amid dollar strength on upbeat U.S. economic growth, while easing geopolitical uncertainty dented safe-demand demand.
Gold futures for April delivery on the Comex division of the New York Mercantile Exchange fell by $17.80, or 1.33%, to $1,324.20 a troy ounce.
A rally in the dollar to 0.84% to 89.71, a five-day high, pressured gold prices, as traders cheered data supporting the narrative of ongoing U.S. economic strength.
Gross domestic product increased at a 2.9% annual rate in the October-December period, the Commerce Department said in its final estimate on Wednesday, beating a previous estimate of 2.5%, and economists’ expectations for a 2.7% increase.
Gold is sensitive to moves higher in the U.S. dollar – a stronger dollar makes gold more expensive for holders of foreign currency, thus, reduces investor demand for the precious metal.
Fading geopolitical uncertainty, meanwhile, reduced investor appetite for safe-haven gold in the wake of reports that North Korean leader Kim Jong Un vowed to commit to denuclearisation amid talks with China’s Xi Jinping. U.S. President Donald Trump welcomed the news of progress following the talks between the two leaders in Beijing.
“Received message last night from Xi Jinping of China that his meeting with Kim Jong Un went very well and that Kim looks forward to his meeting with me,” Trump said in a tweet.
In other precious metal trade, silver futures fell 1.76% to $16.25 a troy ounce, while platinum futures fell 1.22% to $940.80 an ounce.
Copper fell 0.12% to $2.999, while natural gas fell 0.63% to $2.70.