MANILA (Reuters) – Gold hovered near 5-1/2-year lows early on Friday and is on course for a sixth straight weekly fall, its longest retreat since 1999, after strong U.S. economic data strengthened expectations for a near-term hike in interest rates.
Bullion is also set to end July with its biggest monthly decline in more than two years after a deep rout last week further shook investor confidence, with more losses seen ahead.
Spot gold (XAU=) was up 0.1 percent 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. It was down nearly 1 percent for the week and 7 percent for the month.
The metal hit a low of $ 1,081.85 on Thursday as the dollar climbed after data showed the U.S. economy grew 2.3 percent in the second quarter. First-quarter gross domestic product was revised to show growth of 0.6 percent instead of a contraction.
That supported views that the Federal Reserve could raise interest rates as early as September, analysts say. The Fed meets next that month after concluding this week that the world’s largest economy is “expanding moderately.”
A potential hike in U.S. interest rates dims the appeal of non-interest bearing assets such as gold.
U.S. gold for August delivery (GCcv1) was flat at $ 1,088 an ounce.
The Fed will not need to see balanced risks to the economy to proceed with an interest rate hike in September, according to former Fed officials and a review of central bank statements through recent turns in policy.
Gold mining companies are turning increasingly to derivatives to lock in future revenues, as an industry still smarting from losing out on a 12-year bull run gets creative over protecting its income during the metal’s current downturn.
India’s gold jewellery exports could jump five times to $ 40 billion per year by 2020 if quality controls are tightened, the World Gold Council said, adding the country is punching below its weight due to questions over the purity of its products.
Barrick Gold Corp (ABX.TO) agreed to sell 50 percent of its Zaldivar copper mine in Chile to copper miner Antofagasta Plc (ANTO.L) for $ 1 billion in cash.
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(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)
