Gold dips 1 percent as strong global markets weigh

Key Points
  • Gold in narrowest range in 12 years.
  • The precious metal fell after Sen. John McCain announced his support of the Senate's tax reform bill.
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Gold dropped 1 percent on Thursday as upbeat sentiment on equities and positive U.S. growth data dented the appeal of the safe-haven asset, though the metal was still stuck in its narrowest monthly range in 12 years.

Silver dipped to an eight-week low, falling in tandem with other industrial metals, traders said.

The U.S. dollar, in which gold is priced, held firm after U.S. jobless and consumer spending data, taking support from Wednesday's uplift on third-quarter U.S. economic growth.

Spot gold was down 0.67 percent at $1,274.84 an ounce by 3:30 p.m. ET, having earlier hit its lowest since Nov. 14 at $1,270.11.

The bull case for gold and silver, following an unusually calm year

The price is up 0.3 percent this month, though it has been stuck between $1,265 and $1,300 throughout November.

U.S. gold futures settled down $8.90, or 0.7 percent, at $1,273.20 per ounce, closing the month up 0.2 percent.

Gold prices sunk further after Sen. John McCain announced he will support the Senate's tax reform legislation on Thursday.

"After careful thought and consideration, I have decided to support the Senate tax reform bill," McCain said in a statement Thursday. "I believe this legislation, though far from perfect, would enhance American competitiveness, boost the economy, and provide long overdue tax relief for middle class families."

Silver dropped to $16.43 an ounce, its lowest since Oct. 6 and was last down 0.6 percent at $16.41, headed for a 1.7 percent drop over last month.

"Silver is being sold off as part of the industrial complex," said John Lawrence, senior metals trader for Heraeus Precious Metals in New York.

Global equities were on course to finish November with a 13th consecutive monthly gain, though a dive in U.S. technology stocks left investors wondering whether the longest global equity bull run in living memory might be starting to splutter.

"Optimism (in equities) is at record highs, so it should come off a bit, which would be reasonably positive for gold. But the stronger dollar will cap any gains that come on the back of (that)," said Martin Arnold, strategist at ETF Securities.

Early in the session a stronger U.S. dollar weighed on gold, but the greenback reversed as investors added bets that the U.S. central bank will continue to unwind its stimulus plan, helping gold to move off its lows.

The U.S. economy's growth will warrant continued interest rate increases amid a strengthened global recovery, outgoing U.S. Federal Reserve Chair Janet Yellen said on Wednesday.

Bullion is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding gold.

Palladium fell 0.44 percent to $1,009, but headed for a 3 percent monthly rise. Platinum was up 0.42 percent at $940.40 an ounce, also poised for a 3 percent rise for the month.