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Gold trades near 1-week low as investors weigh economy

Gold was little changed near a one-week low in New York, as investors weighed signs that the U.S. economy is strengthening against tensions over Ukraine and in the Middle East.

Data showed Wednesday gross domestic product rebounded in the United States, while the Federal Reserve said it would trim monthly bond buying for a sixth time.

It said that slack in the labor market persisted even as the economy was picking up, repeating that it will keep interest rates low for a considerable time after ending asset purchases.

Bullion fell 2 percent this month as the dollar, which reached a four-month high versus 10 major currencies Thursday, rose 1.9 percent.

The metal still gained this year, partly as geopolitical tensions spurred haven demand.

The European Union and United States have expanded sanctions against Russia for its role in Ukraine, while Israel has said its army is ready to push further into the Gaza Strip.

“Positive U.S. economic data is good for the dollar and bad for gold,” said Lv Jie, an analyst at Cinda Futures Co., a unit of one of four funds in China created to buy bad debt from banks. “Geopolitical concerns still exist for support but the longer-term downtrend is unchanged as the U.S. moves toward tighter monetary policy.”

Gold for December delivery lost 0.1 percent to $1,295.50 an ounce by 7:38 a.m. on the Comex in New York.

It reached $1,292.90, the lowest since July 24, after falling the previous two days. Bullion for immediate delivery fell 0.1 percent to $1,294.41 in London, according to Bloomberg generic pricing.

Trading volume

Futures trading volume was 40 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Interest-rate increases may come “sooner and be more rapid than currently envisioned” if the labor market continues to improve more quickly than anticipated, Fed Chair Janet Yellen told lawmakers this month. Labor Department data due tomorrow may show employers added more than 200,000 jobs for a sixth month.

The Fed meeting “did not have much of an impact on gold as the continuing tapering of quantitative easing was partially offset by the Fed’s not-so-optimistic stance on labor markets,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report Thursday.

Silver for September delivery was 0.4 percent lower at $20.685 an ounce in New York, for a 1.7 percent monthly drop. Platinum for October delivery was little changed at $1,480.40 an ounce, for a 0.2 percent loss in July.

Palladium for September delivery added 0.2 percent to $881.75 an ounce, and rose 4.6 percent this month, a sixth straight advance in the longest such run since January 2011. The metal reached a 13-year high of $890 on July 17.

Platinum and palladium have gained this year as restricted output from a five-month mine strike that ended in June in South Africa, the biggest platinum producer, and rising usage in cars added to supply shortages. Russia is the top palladium supplier, with South Africa the next largest.

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