Investing.com - Gold prices slid slightly lower on Friday as the dollar moved higher on the back of upbeat U.S. economic reports, as investors continued to mull the implications of China’s currency devaluation on the timing of an initial U.S. rate hike.
Gold for December delivery dipped 0.13% to $1,114.2 in late trade on the Comex division of the New York Mercantile Exchange.
For the week, though, gold futures rose by more than 2% following a three-day rally earlier in the week.
The greenback was boosted after data showing that U.S. producer prices were higher for a third straight month in July, while factory output increased at the fastest rate in eight months.
But another report showed that U.S. consumer sentiment dipped slightly in this month.
The largely positive data bolstered the outlook for third quarter growth and underlined expectations for a rate hike by the Federal Reserve as early as next month.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to 96.61 following the release of the data. The index still ended the week down 1.12%, the largest decline in nine weeks.
The dollar had weakened broadly earlier in the week after China devalued its currency in a surprise move on Tuesday, in a bid to shore up growth in the flagging economy.
The People’s Bank of China described the move as a “one-off depreciation”, based on a new way of managing the exchange rate that better reflected market forces.
Uncertainty over the impact of the devaluation on global inflation expectations and the outlook for growth in China sparked fears that the Fed could keep short-term interest rates on hold for longer.
But market volatility eased as the yuan steadied after the PBOC said Thursday there was no reason for the currency to fall further given the country's strong economic fundamentals.
Also on the Comex, silver for September delivery fell 1.39%, on Friday to settle at $15.18 a troy ounce by close of trade, trimming the week’s gains to 3.12%.
Elsewhere in metals trading, copper for September delivery was down 0.44% on Friday to settle at $2.34 a pound, not far from the six-and-a-half year trough of $2.29 set on Wednesday as the yuan tumbled.
A combination of concerns about oversupply and expectations of slowing demand from China, which accounts for approximately 40% of global demand, have weighed on the outlook for copper.