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.
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.
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