NEW YORK/LONDON: Gold traded flat on Thursday, bouncing off its lowest level in nearly four months after data showing that the U.S. economy contracted in the first quarter for the first time in three years.
The U.S. Commerce Department estimated that gross domestic product shrank in the first quarter at a 1.0 percent annual rate. Economists blamed severe winter weather, and the stock market took the news in stride, with all three major U.S. stock indexes moving higher. The U.S. Labor Department reported separately that applications for jobless benefits declined last week.
Analysts said gold prices should find support in an oversold market, but the precious metal will likely face more headwinds from better overall economic conditions.
"The GDP figure has offset the jobless claims which have continued to become better," said Thomas Capalbo, precious metals trader at brokerage Newedge. "However, there is no real safe-haven need in times of an improving economy and stability."
Spot gold fell as low as $1,251.10 an ounce, its lowest since Feb. 4. It inched up 19 cents to $1,257.80 by 11:19 a.m. EDT (1519 GMT).
U.S. COMEX gold futures for June delivery were down $1.90 an ounce at $1,257.40 an ounce.
Analysts noted a breakdown of gold's usual inverse correlation with U.S. bond yields. Yields on 10-year U.S. Treasuries tumbled to their lowest in 11 months.
Precious metals markets are closely monitoring news the Chicago Mercantile Exchange (CME) said that it is working with the London Bullion Market Association (LBMA) and precious metals industry to find an alternative to the daily silver fixing mechanism, which will be disbanded in August.
Silver fell 0.1 percent to $19.01 an ounce.
Among other precious metals, platinum rose 0.6 percent to $1,456.70 an ounce, while palladium was down 0.5 percent at $830.22 an ounce.
A deadlock in South Africa's crippling 18-week platinum strike will soon be broken after movement made on both sides of the wage dispute, the country's new mines minister Ngoako Ramatlhodi declared on Wednesday.
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