Looking ahead, seasonal demand from China is seen lifting the price of gold
Gold edged lower Friday after U.S. growth estimates were nudged higher and Federal Reserve Chairwoman Janet Yellen said a rise in U.S. interest rates is likely to happen later this year.
The tandem developments sent signals of an improving U.S. economy, and stocks and the dollar rose. Gold, a defensive investment that people look to in times of turbulence, loses appeal under improving conditions. Gold futures for the most-actively traded December contract fell $6.70 or 0.6% to $1,147.10 an ounce on the Comex division of the New York Mercantile Exchange.
Ms. Yellen told an audience at the University of Massachusetts that a rate increase could happen before the end of the year. The FOMC has two more scheduled meetings left in 2015 to make its move, one in October and one in December.
As a result, “the dollar strengthened and some selling was noted in gold,” David Govett, head of precious metals trading at Marex Spectron, said in a note.
A rate increase would strengthen the dollar further and make the precious metal more expensive to buy for other currency-holders.
Looking ahead, seasonal demand from China is expected to boost the price of the precious metal. China accounts for roughly a quarter of global gold demand.
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