Investing.com - Gold futures fell on Friday despite less-than-stellar U.S. economic indicators, as markets bet the U.S. economy continues to recover and is in less need of monetary support from the Federal Reserve.
Monetary stimulus tools such as the Fed's monthly asset-purchasing program weaken the dollar by suppressing longer-term interest rates, making gold an attractive hedge as long as they remain in place.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,245.40 a troy ounce during U.S. trading, down 0.93%, up from a session low of $1,242.50 and off a high of $1,260.60.
The August contract settled down 0.21% at $1,257.10 on Thursday.
Futures were likely to find support at $1,237.50 a troy ounce, the low from Jan. 30, and resistance at $1,304.10, last Thursday's high.
The revised Thomson Reuters/University of Michigan consumer sentiment index ticked up to 81.9 this month from 81.8 in April, missing market expectations for a reading of 82.5.
While harsh winter weather dampened spirits, concerns wages will remain weak did more so.
"The May decline in consumer confidence was not due to the dismal state of the economy during the 1st quarter, which had the weakest pace of GDP growth in three years. Consumers thought the harsh winter weather was mainly responsible," the indicator's statement read.
Consumer sentiment would suffer more if the economy failed to rebound in the months ahead, though the survey revealed that consumers feel the economy will be strong enough to produce more jobs in the year ahead.
"The main concern expressed by consumers involved dismal prospects for wage growth. Tiny wage gains meant that nearly half of all households anticipated declines in inflation-adjusted incomes during the year ahead," the statement read.
Elsewhere, the Commerce Department reported that personal spending in the U.S. fell 0.1% last month, compared to expectations for a 0.2% rise, after a 1.0% increase in March, whose figure was revised from a previously estimated 0.9% gain.
U.S. core personal consumption expenditures, which exclude food and energy, rose 0.2% in April, in line with expectations, after a 0.2% increase the previous month.
Separately, industry data revealed that the Chicago purchasing managers' index rose to a seven-month high of 65.5 in May, from 63.0 in March, confounding expectations for a fall to 61.0.
On Thursday, the Bureau of Economic Analysis reported that the U.S. economy contracted 1.0% in the first quarter after a preliminary estimate showed growth of 0.1%.
Market expectations had been for a 0.5% contraction. It was the first decline in U.S. GDP since the first quarter of 2011, and the dollar softened on the news, reminding investors that even when the Federal Reserve winds down stimulus programs, rate hikes won't come for some time afterwards.
Still, gold ignored the data, as the U.S. economy continues to recover, which will steer investors' attention to stocks and base metals.
Technical selling and waning physical demand in Asia sent prices falling as well.
Meanwhile, silver for July delivery was down 1.75% at $18.682 a troy ounce, while copper futures for July delivery were down 0.66% at $3.124 a pound.