Investing.com - Gold prices struggled below the $1,100-level on Thursday, after data showed that U.S. economic growth accelerated in the second quarter, supporting the case for higher interest rates later this year.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange hit an intraday low of $1,081.50 a troy ounce before trading at $1,086.70 during U.S. morning hours, down $6.50, or 0.59%.
A day earlier, gold dipped $3.40, or 0.31%, to close at $1,093.30. Futures fell to a five-and-a-half year low of $1,072.30 on July 24.
Also on the Comex, silver futures for September delivery shed 4.8 cents, or 0.33%, to trade at $14.69 a troy ounce.
The Commerce Department said earlier that the economy grew 2.3% in the three months ended June 30, missing expectations for growth of 2.6%. The economy expanded 0.6% in the preceding quarter, compared to a previously reported contraction of 0.2%.
The data showed personal consumption rose 2.9% in the second quarter, above expectations for a 2.7% gain, and compared to a 1.8% increase in the preceding quarter. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
At the same time, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits rose by 12,000 last week to 267,000 from the previous week’s total of 255,000. Analysts had expected initial jobless claims to rise by 15,000 to 270,000 last week.
First-time jobless claims have held below the 300,000-level for 21 consecutive weeks, which is usually associated with a firming labor market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.31% to 97.52 early on Thursday, improving from 97.08 by close of trade on Wednesday.
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.
The greenback was boosted after the Federal Reserve sounded more upbeat about the economy following its policy meeting, leaving the door open for an interest-rate hike as soon as September.
In its rate statement published Wednesday, the Fed described the economy as expanding "moderately," while upgrading its view of the labor and housing markets.
The central bank gave no clear indication of the timing of the next rate hike, but left itself room to act as early as September, citing "solid" gains in the job market and "additional" improvement in the housing sector.
Gold has been under heavy selling pressure in recent months amid speculation the Fed will hikes rates for the first time in nine years this autumn.
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.
Elsewhere in metals trading, copper for September delivery dropped 3.2 cent, or 1.34%, to trade at $2.375 a pound during morning hours in New York. Prices fell to a six-year low of $2.336 on Monday.
The Shanghai Composite took investors on another volatile ride on Thursday, with shares plunging sharply in the last hour of trade amid reports that Chinese banks were investigating their exposure to the stock market.
Equity markets in China tumbled earlier this week, forcing policymakers to intervene and provide measures to boost liquidity and calm investors.
Chinese regulators pledged to buy more shares to stabilize markets, while the country's central bank hinted at more policy easing if needed.
On Monday, the Shanghai Composite tumbled 8.5%, the biggest one-day drop since February 2007, amid reports that government buying of stocks and securities has slowed.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.