Gold, Silver Futures Gain as Dollar Falls on U.S. GDP Plunge

April 29 (Bloomberg) -- Gold prices rose for the first time in three days as the U.S. economy’s slump drove the dollar lower, enhancing the appeal of the precious metal as an alternative investment. Silver also gained.

Gross domestic product plunged again in the first quarter, capping the worst U.S. performance in five decades amid a record slump in inventories and further declines in housing. Gold climbed 5.3 percent last week, while the dollar has dropped in six of seven sessions against a basket of major currencies.

“The abysmal GDP data for the first quarter dented the dollar and sent a fresh platoon of safe-haven buyers toward the shining shelter offered by gold,” said Jon Nadler, a senior analyst at Kitco Inc. in Montreal.

Gold futures for June delivery rose $6.90, or 0.8 percent, to $900.50 an ounce on the Comex division of the New York Mercantile Exchange. Gold dropped 2.2 percent in the previous two days. The metal has gained 1.8 percent this year.

Silver futures for July delivery advanced 34.9 cents, or 2.8 percent, to $12.775 an ounce. The metal has climbed 13 percent this year.

The GDP report was released hours before the Federal Reserve announced it had refrained from increasing purchases of Treasuries and mortgage securities, saying that the economy is showing some signs of stability. The central bank’s Open Market Committee issued a statement after a two-day meeting.

“Some participants feel that the GDP numbers may elicit fresh actions by the Fed,” Nadler said before the bank’s announcement. “Maintenance of the $900 level is still critical for gold in light of the rather anemic performance it has exhibited prior to recent days.”

Gold has fallen 2.6 percent this month, while the MSCI World Index of equities gained 10 percent.

For gold, “our longer-term bias remains negative,” Tom Pawlicki, an analyst at MF Global Ltd. in Chicago, said in a report. “Longer-term pressure will come from the developing upward trend in the stock market and a weak outlook for inflation.”