Gold drops for third consecutive session as eyes fixed on Yellen's speech

Gold prices fell in American trade on Thursday, widening their losses for the third session and hitting a two-week low as risk appetite grew in the markets and demand waned on safe havens, as oil prices surged for the second day, and after strong GDP growth data, which bolstered expectations of a Fed rate hike next December, while investors await Fed Chair Yellen's speech later today to reassess the chances of a rate hike this year. 

As of 16:35 GMT, gold fell to $1,318.60 an ounce from the opening price of $1,321.61, with an intraday high at 41,325.68, and a low at $1,315.99, the worst since September 21. 

Gold closed down 0.5% yesterday as demand slowed down on safe havens and investors headed for riskier assets after OPEC announced the first production deal in eight years. 

Oil prices surged over 2.5%, adding to their gains for the second session and hitting multi-week highs as the sentiment brightened following the OPEC deal. 

Global stock markets also kept rising, led by energy and commodity shares as oil prices and risk sentiment surged, and liquidity headed towards high-yield assets like stocks and bonds. 

Earlier U.S. data showed GDP growing by 1.4% in the second quarter, besting forecasts of 1.3%, and compared to 1.1% in the second reading, while unemployment claims came at 254 thousand last week, less than the 260K expected. 

The strong data bolstered expectations of a U.S. rate hike in December, supported by bullish comments from Fed officials.  

Fed Atlanta President Denis Lockhart said the economy is nearing the bank's targets in employment and inflation, indicating its readiness for a rate hike soon, while Philly Fed President Patrick Harker said policymakers should go ahead and raise rates. 

Investors now await Fed Chair Janet Yellen's speech later today in Kansas City to reassess the chance of a rate increase this year. 

Gold holdings at the SPDR Gold Trust, the world's largest gold-backed exchange-traded funds remained the same yesterday at 949.14 metric tonnes, the lowest since September 21.