Investing.com -- Gold futures resumed their precipitous decline on Friday one session after halting its longest losing skid in nearly two decades, as continuing worries related to the fledgling Chinese economy and the timing of an interest rate hike by the Federal Reserve remained in focus.
On the Comex division of the New York Mercantile Exchange, gold for August delivery fell to a fresh-year low dipping below $1,080 a troy ounce before rallying slightly in U.S. afternoon trading. The precious metal traded in a broad range between $1,076.20 and $1,090.60 an ounce, before settling at 1,085.00 an ounce, down 9.10 or 0.83%.
For the week gold futures lost about 4.25 % in value after opening on Monday around $1,090. On Thursday, the precious metal rose modestly by approximately 0.25% to end a 10-day losing streak, its longest since 1996. As late as the end of last month, gold futures remained above $1,200 an ounce.
Gold resumed its slide early in the Asian trading session after the Markit Chinese PMI survey for July fell to a 15-month low at 48.2, well below expectations of a 48.2 reading. China is the world's largest producer and second-largest consumer of gold.
The dollar, meanwhile, surged to intraday highs amid positive manufacturing data before paring some of the gains following the release of disappointing housing figures. The Markit July PMI index in the U.S. ticked up to 53.8, above last month's reading of 53.4. Shortly after, however, the U.S. Commerce Department said new home sales plunged 6.8% in June to 482,000. Median home prices remained soft at $281,000.
The U.S. Dollar Index, which measures the strength of the greenback, versus a basket of six other major currencies, reached an intraday high of 97.75 before falling back to 97.37, up 0.09%.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Gold prices could decline even further if the FOMC offers more hints next week that an interest rate hike might be imminent. Earlier this week, Federal Reserve of St. Louis president James Bullard said there is a 50% chance the Fed will raise rates at its FOMC meeting in September. It came days after Fed chair Janet Yellen reiterated that conditions in the economy are likely to justify an interest rate hike at some point this year. Nearly a decade has passed since the U.S. central bank last lifted its benchmark Federal Funds Rate. For nearly six years, short-term interest rates have remained level between zero and 0.25% since the end of the Financial Crisis.
Gold, which is not attached to dividends or interest rates, struggles to compete with high-yield bearing assets in periods of rising rates.
Silver for September delivery plunged 0.211 or 1.44% to 14.493 an ounce.
Copper for September delivery fell 0.001 or 0.03% to 2.383 a pound.