Investing.com - Gold prices moved lower during Europe's session on Friday, as investors looked ahead to the publication of the U.S. third quarter gross domestic product (GDP) and its possible impact on Federal Reserve (Fed) monetary policy .
Gold for December delivery on the Comex division of the New York Mercantile Exchange dropped $1.35, or 0.11%, to $1,268.15 a troy ounce by 3:51AM ET (07:51GMT).
The U.S. is set to release preliminary data on third quarter GDP at 8:30AM ET (12:30GMT) Friday. Consensus expects the reading to show a significant strengthening from the second quarter’s 1.4% growth to a 2.5% expansion.
Fed officials have indicated that interest rates could rise in December if the economy remains on track.
The near-term outlook for gold remains cloudy as a recent string of positive U.S. economic data combined with hawkish remarks from key Fed officials heightened expectations for an interest rate hike before the end of the year.
The U.S. central bank's next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely.
Instead, traders are currently pricing in around a 78% chance of a rate hike at the Fed's December meeting, according to Investing.com's Fed Rate Monitor Tool.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.
A day earlier, the yellow metal gained $3.10, or 0.25%, after data showed that orders for U.S. manufactured capital goods unexpectedly fell in September.
Total durable goods orders, which include transportation items, dropped 0.1% last month, the Commerce Department said, compared to economists' expectations for a gain of 0.1%.
Core durable goods orders, which exclude volatile transportation items, rose 0.2% last month, in line with forecasts.
Durable goods excluding defense and aircrafts slumped 1.2% in September, compared to expectations for a 0.3% gain.
A separate report released at the same time on Thursday showed that the number of people who filed for unemployment assistance in the U.S. last week fell less than expected, but remained in territory associated with a healthy labor market.
The number of individuals filing for initial jobless benefits decreased by 3,000 last week to 258,000, the Department of Labor said. Analysts expected jobless claims to fall by 6,000 to 255,000 from the previous week’s total of 261,000.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 98.74 early Friday, within sight of a nine-month high of 99.09 touched earlier this week.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Also on the Comex, silver futures for December delivery shed 1.6 cents, or 0.09%, to $17.623 a troy ounce during morning hours in London, while copper futures gained 0.3 cents, or 0.16%, to $2.163 a pound.