Gold Prices Drops to Session Lows After Upbeat U.S. Data, Investors Also Monitor China

Gold Prices Drops to Session Lows After Upbeat U.S. Data, Investors Also Monitor China

US gold futures fell by 2 percent to the lowest levels of the session on Thursday after data showed the United States economy grew more than initially estimated in the second quarter, increasing optimism about the economic health and supporting the event of a US interest rate hike this year, while investors keep a close watch over China’s efforts to support its economy.

Spot gold XAU dropped as much as 2 percent to a one-week low of $ 1117.35 an ounce, but fell 1.2 percent to $ 1126.66. It was his third consecutive decrease last week for seven weeks.

On the Comex Gold for December delivery dipped $3.50, or 0.31%, to trade at $1,121.10 a troy ounce during U.S. morning hours after hitting a daily low of $1,119.10.

The DOC said the United States economy, increased 3.7% in the three months ended June 30, above the expectations of of 3.2% growth. The preliminary figures initially linked US growth at 2.3% in the second quarter.

The data showed that personal consumption rose 3.1% in the second quarter, meeting expectations and compared with an initial estimate of 2.9%. Consumer spending normally accounts for almost 70% of economic growth in the United States.

Simultaneously, the Department of US Labor said the number of people apply for initial unemployment benefit fell by 6,000 last week to 271,000. Analysts had expected initial jobless claims to drop to 3000 to 274,000 last week.

Unemployment claims for the first time have remained below the 300,000 level for 25 straight weeks, which is usually associated with a firming labor market.

The upbeat data must be strengthened expectations of a hike in interest rates by the Federal Reserve early next month. The timing of a rate hike by the Fed has been an ongoing source of debate in the markets in recent months.

Wall Street rose while European equities and commodities fell as investors strong comments from US economic data and policy balanced with concerns about the economic slowdown in China.

In the most clear statement that fears of a slowdown in the Chinese economy could influence US monetary policy, president of the New York Fed, William Dudley, said the prospect of a rate hike in September “seems less convincing” a few weeks ago.

Similarly, at the Multi Commodity Exchange, gold for delivery in far -month December fell by Rs 57, or 0.21 per cent to Rs 26,618 per ten gram as speculators engaged in reducing their positions.

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