Gold re-approaches 5-1/2 year lows on U.S. rate hike speculation
Investing.com – Gold prices dropped in European morning hours on Friday, to trade near a five-and-a-half year low as data showing that U.S. economic growth accelerated in the second quarter added to expectations for higher interest rates later this year.
On the Comex division of the New York Mercantile Exchange, for December delivery were down 0.73% at $1,080.70.
The December contract ended Thursday's session 0.42% lower at $1,088.70 an ounce.
Futures were likely to find support at $1,073.70, the low from July 24 and a five-and-a-half year low and resistance at $1,098.20, Thursday's high.
Gold prices dropped after the Commerce Department reported on Thursday that expanded at an annual rate of 2.3% in the three months to June. First quarter growth was revised up to 0.6% from a previously reported contraction of 0.2%.
Although economists had forecast growth of 2.6% the report still indicated that the economy is on a solid footing.
The data came after the Fed said in its rate statement on Wednesday that the economy and the labor market had continued to strengthen, reinforcing expectations for an initial rate hike at its September meeting.
Fed officials said they felt the economy had recovered from a first-quarter slowdown and was now “expanding moderately.”
Fed Chair Janet Yellen has said the central bank could raise rates as soon as September if the economy continues to improve as expected.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.51 in European morning trade, close to Thursday's one-week high of 97.89.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Elsewhere in metals trading, for September delivery tumbled 1.06% to $14.545 a troy ounce, while for September delivery dropped 0.45% to $2.366 a pound.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.