NEW YORK, Oct 30 (Reuters) - Surprisingly upbeat news on U.S. economic growth Thursday morning jammed the brakes on COMEX gold's rally toward 7-year highs hit in September, as a rising dollar lured investors out of safe havens.
The Commerce Department report that third-quarter gross domestic product surged an annualized 7.2 percent was badly timed for gold bulls, who prefer uncertainty about the economy and the dollar and had chased gold futures up $12 since Wednesday.
December gold at 0930 EDT was off $1.60 at $385.40 an ounce, trading down to $385.00 from an early high of $292.00.
Spot gold was quoted at $385.35/6.10, down from the prior close at $386.40/6.90. London bullion dealers fixed the morning reference price at $391.00.
GDP came in even better than optimistic consensus forecasts for a 6.0 percent annualized quarterly gain. It more than doubled the second quarter's 3.3 percent expansion rate.
Confirmation that the economy grew briskly steadied the dollar before gold could retest the Sept 25 peak of $394.80, testing fund's patience for the expected challenge of $400 an ounce.
"Short-term we could trade $400 in gold. It's still kind of a house of cards," said James Pogoda, precious metals vice president at Mitsubishi International Corp.
"There are competing forces -- the huge current account deficit on the dollar bear side," Pogoda said. "If the U.S. leads a global recovery and if we see money coming into U.S. securities, it's going to bolster the dollar and we'll get shoved around in between."
Gold's climb overnight added to Wednesday's $3.60 COMEX gain as dollar weakness against the euro and yen prompted speculators to bet that overseas investors would take advantage of cheaper local-currency gold prices.
Meanwhile, December silver was 2.3 cents firmer at $5.165 an ounce, trading from $5.13 to $5.21.
Spot silver was last quoted at $5.14/16, up from $5.12/14 late Wednesday. The fix was $5.185 an ounce.
NYMEX January platinum was $1.60 higher at $759 an ounce, continuing to another contract high at $766.80 as spot prices rallied further into levels not seen in 23 years.
Spot platinum fetched $760.00/765.00. The dollar's weakness against the yen has encouraged continued Japanese buying, amid worries that the strong rand will prevent South Africa from reaching its targets for increased production.
"With the specs still on the bid and the dollar's weakness negating some of the effects of higher prices, there seems to be little in the way of resistance, leaving $800 a distinct possibility," wrote James Moore of TheBullionDesk.com.
December palladium was $4.50 firmer at $211.00 an ounce. Spot palladium fetched $207.00/212.00.