Metals Stocks: Gold futures fall as U.S. GDP data lifts the dollar

Gold futures headed lower on Thursday, after upbeat U.S. economic data gave boost to the U.S. dollar and the Federal Reserve left open the possibility of a interest-rate hike in September.

August gold GCQ5, +0.01%  traded at $ 1,089.70 an ounce on Comex, down $ 2.90 or 0.3%. The contract has traded as low as $ 1,081 an ounce, according to FactSet data, meaning it’s continuing to wallow close to levels last seen in early 2010.

The report on gross domestic product was the main factor driving prices lower, said Colin Cieszynski, chief market strategist at CMC Markets.

Data Thursday showed that GDP rose at a 2.3% annual rate from April to June. Core personal consumption expenditures rose to a 1.8% annual pace from 1% in the first three months of the year.

“GDP and related numbers clearly keep the Fed on a par toward interest rate liftoff,” said Cieszynski. “In particular, rising core PCE inflation approaching 2.0% indicates [that] the pressure on the Fed to start raising rates before they get behind the curve again is growing.”

Against that backdrop, the ICE U.S. Dollar Index DXY, +0.44% edged up by 0.6%, weighing on dollar-denominated commodities like gold.

Wednesday’s Fed statement, which indicated it soon could raise rates, has also supported the dollar, because higher interest rates in the U.S. would make the buck a more attractive investment relative to other currencies.

Gold’s fans will watch to see how aggressively the Fed behaves, as well as watch for when the central bank lets its balance sheet contract, said Chris Weston, IG’s chief market strategist, in a note on Thursday.

“If the Fed get this wrong, then gold will rediscover its mojo in a big way,” he said. Until then, “selling rallies seems the way to go for the yellow metal.”

Check out: Goldman’s Jeff Currie sees gold at $ 1,050, crude oil at $ 45

Julian Phillips, founder of and contributor to GoldForecaster.com, pointed out it appears to be dealers moving gold prices lower in line with the moves in the dollar Thursday.

“If this had been physical selling, I would have said that the way forward is down,” he said. “But as it is dealer’s pricing and can recover quickly, I would say it will move sideways until something happens of a more significant nature.”

Among the other Comex metals, September silver SIU5, +0.08%  tacked on 3.2 cents, or 0.2%, to $ 14.775 an ounce.

Platinum for October delivery PLV5, +0.19% rose $ 1.60, or 0.2%, to $ 986.50 an ounce, while September palladium PAU5, +0.64%  gained $ 5.25, or 0.9%, to $ 620.85 an ounce. September copper HGU5, -0.91%  shed 2.4 cents, or 1%, to $ 2.383 a pound.

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