The metal has lost 6.4 per cent so far this month, its steepest decline since June 2013. The precious metal is down 7.5 percent for the year.
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Data yesterday showed the US economy grew 2.3 per cent in the second quarter, less than the 2.6 per cent estimated in a Reuters poll, although first-quarter gross domestic product was revised to show growth of 0.6 per cent instead of a contraction.
Fed policy makers expressed satisfaction with progress toward full employment and used one word – “some” – to describe the additional gains it wants before raising rates.
Spot gold was up 0.1 per cent at $1,088.86 an ounce by 0037 GMT, but not far above last week’s trough of $1,077, its lowest since February 2010. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors. Weaker labor costs could give the Federal Reserve a reason to hold off on delivering a rate hike that investors have largely penciled in for later this year.
The data followed the Fed’s policy meeting earlier this week at which policymakers concluded that the world’s largest economy is “expanding moderately”.
The euro turned higher against the U.S. dollar on Friday, as positive euro zone inflation data lent some support and as sentiment on the greenback mildly weakened ahead of a U.S. consumer sentiment report due later in the day.
“That big overhang is enough to keep gold trading at low levels”, said Argonaut Securities analyst Helen Lau, referring to the looming US rate increase. Prices declined as the dollar strengthened, on the outlook for rate rises and amid weaker demand for physical gold, Lai said.
Silver futures for September delivery retreated 0.3 per cent to $14.696 an ounce on the Comex. “Physical demand has been on the low side with premiums in China and India hardly moving”, MKS Group trader Jason Cerisola said in a note.
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Bullion for immediate delivery slid as much as 0.5 percent to $1 083.18 an ounce and traded at $1 084.57 at 2:50 pm in Singapore, according to Bloomberg generic pricing.
