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Gold futures drop amid U.S. rate hike talk

Published 09/28/2015, 02:58 AM
Updated 09/28/2015, 02:58 AM
© Reuters.  Gold prices decline on growing U.S. rate hike hopes

© Reuters. Gold prices decline on growing U.S. rate hike hopes

Investing.com - Gold prices dropped in European morning hours on Monday, as expectations for a U.S. rate hike in the near future continued to weigh on the precious metal and as investors eyed speeches by several Federal Reserve officials scheduled later in the day.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery lost 0.72% to $1,137.30.

The December contract ended Friday's session 0.71% lower at $1,145.60 an ounce.

Futures were likely to find support at $1,133.00, the low from September 24 and resistance at $1,155.90, the high from September 24.

Federal Reserve Chair Janet Yellen said last Thursday that the U.S. central bank remains on track to raise interest rates this year.

The comments reassured investors that monetary policy has not altered significantly following the Fed’s decision to hold off hiking rates earlier this month.

Gold had been pressured lower in recent months by uncertainty over when the Fed would hike interest rates from record-lows.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

In addition, data on Friday showed that the U.S. economy grew at a faster rate than previously estimated in the three months to June.

The Commerce Department said gross domestic product expanded at an annual rate of 3.9% in the second quarter, up from an initial estimate of 3.7%.

Consumer spending, which comprises more than two-thirds of U.S. economic activity was revised up to 3.6% from the 3.1% reported in August.

Elsewhere in metals trading, silver futures for December delivery tumbled 1.26% to $14.905 a troy ounce, while copper futures for December delivery slid 0.36% to $2.275 a pound.

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