China Considering Dropping U.S. Treasuries for Gold
Posted January 30th, 2009 by MississippiGRITS
LONDON, Jan 30 (Reuters) - Gold slipped from a three-month high on Friday after data showed the U.S. economy had contracted by less than expected in the fourth quarter, taking some of the heat out of safe-haven buying.
Spot gold climbed 2 percent to $926.90 an ounce, its highest since Oct 10. It was quoted at $918.90/920.90 an ounce at 1406 GMT, up from $906.75 in New York late on Thursday. In the immediate wake of the data it slipped to $916.60.
Gold priced in euros hit a record high of 720.53 euros.
"On first glance the (GDP) figures are generally good, so they should be negative for gold," Calyon analyst Robin Bhar said. "Growth is better than expected, but deflation is also stronger, so it is a bit of a double whammy for gold."
The U.S. Commerce Department said fourth-quarter gross domestic product fell at a 3.8 percent annual rate, the lowest pace since the first quarter of 1982. [ID:nN29308953]
Analysts had forecast GDP contracting 5.4 percent in the fourth quarter.
Gold is still being supported, however, by interest in the precious metal as a haven from risk.
U.S. gold futures for February delivery GCG9 on the COMEX division of the New York Mercantile Exchange were up $15.80 at $920.80 an ounce.
Market talk of China taking an interest in gold as an alternative to U.S. Treasuries, and of a European fund buying bullion, also helped support prices.
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