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Gold futures rise but upside seen limited

Published 08/28/2015, 02:48 AM
Updated 08/28/2015, 02:48 AM
© Reuters. Gold futures gain some ground but remain under pressure

© Reuters. Gold futures gain some ground but remain under pressure

Investing.com - Gold prices rose in European morning hours on Friday, but gains were expected to remain limited as upbeat U.S. economic reports and lower volatility in Asia dampened demand for the safe-haven metal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were up 0.55% at $1,129.00.

The December contract ended Thursday's session 0.18% lower at $1,122.60 an ounce.

Futures were likely to find support at $1,117.00, Thursday's low and resistance at $1,146.00, Wednesday's high.

Gold prices came under pressure after the Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 3.7% in the three months ending June 30, above expectations for growth of 3.2%.

Preliminary data initially pegged U.S. growth at 2.3% in the second quarter. The U.S. economy expanded 0.6% in the previous quarter.

In addition, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending August 22 declined by 6,000 to 271,000 from the previous week’s total of 277,000.

Analysts had expected initial jobless claims to fall by 3,000 to 274,000 last week.

Market players now looked ahead to U.S. data on trade, personal spending and consumer sentiment due later Friday, amid ongoing speculation over a September rate hike.

Gold has been under heavy selling pressure in recent months amid speculation the Federal Reserve will raise interest rates in September for the first time since 2006.

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.

The upbeat U.S. data added to optimism over the perspective for global economic growth, while concerns over volatility in Asian markets continued to subside. Shares in Shanghai opened higher on Friday, after closing over 5% the day before.

Elsewhere in metals trading, silver futures for September delivery rose 0.23% to $14.450 a troy ounce, while copper futures for September delivery slid 0.29% to $2.328 a pound.

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