Investing.com - Gold prices were slightly lower in North American trade on Monday, after data showed that U.S. construction spending fell for a third straight month in June as outlays dropped across the board.
The disappointing report suggesting a downward revision to the second-quarter economic growth estimate published last week is on the horizon.
In a separate report, U.S. factories expanded for a fifth straight month in July, another sign that U.S. manufacturers are recovering from damage caused by a strong dollar, according to the Institute of Supply Management.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $1.35, or 0.1% to trade at $1,356.25 a troy ounce by 14:30GMT, or 10:30AM ET.
On Friday, prices jumped to $1,362.00, the most since July 11, after data showed the U.S. economy grew much slower than expected in the second quarter, sending the dollar to five-week lows and prompting market players to roll back expectations of a rate hike from the Federal Reserve.
The advance read on second quarter GDP showed a 1.2% annualized growth rate, well below expectations for 2.6%, the Commerce Department said on Friday. First quarter GDP was revised lower to 0.8% from 1.1%.
The disappointing data lessened the threat of an early interest rate rise from the Federal Reserve. Fed funds futures are currently pricing in just a 12% chance of a rate hike by September. December odds were at 33%, down from 43% ahead of the GDP report and compared to 53% at the start of last week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, plunged to a five-week low of 95.34 in wake of the disappointing GDP report. It was at 95.65 by early Monday.
The precious metal scored a weekly gain of $33.30, or 1.96%, last week, after the Fed left interest rates unchanged at the conclusion of its policy meeting and said near-term risks to the U.S. economic outlook had diminished. However, the central bank stopped short of signaling that a further increase in U.S. interest rates is on the cards for later this year.
Gold is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
Gold ended July with a gain of 3%. For the year, prices are up nearly 26%, boosted by concerns over global growth and expectations of monetary stimulus.
The yellow metal surged to a more than two-year high of $1,377.50 in early July, as concerns surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
Also on the Comex, silver futures for September delivery tacked on 11.5 cents, or 0.57%, to trade at $20.46 a troy ounce during morning hours in New York, while copper futures shed 1.0 cent, or 0.47%, to $2.211 a pound.
China's manufacturing sector painted a mixed picture in July, with the official activity gauge unexpectedly slipping into contraction territory while another survey pointed to an expansion for the first time in 17 months.
The official manufacturing purchasing managers' index, which tracks the health of large and state-owned enterprises, fell to 49.9 in July from 50.0 a month earlier, the first contraction in five months.
Meanwhile, the Caixin manufacturing purchasing managers’ index, which covers a greater share of small-to-medium sized companies, rose to 50.6 last month, expanding for the first time in 17 months.
The 50-point mark separates expansion from contraction.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.