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MTECHTIPS:-Gold futures extend losses after U.S. consumer spending report

MTECHTIPS:-Gold futures extend losses after U.S. consumer spending report

Gold prices extended losses on Monday, after data showed that U.S. personal spending rose broadly in line with market expectations in June, underlining optimism over the health of the economy and supporting the case for an interest rate hike this year. Gold futures for December delivery on the Comex division of the New York Mercantile Exchange dipped $4.30, or 0.39%, to trade at $1,090.80 a troy ounce during U.S. morning hours. Futures fell to a five-and-a-half year low of $1,072.30 on July 24. Gold prices lost $79.50, or 6.72%, in July, the biggest monthly decline since June 2013. The Commerce Department said that personal spending rose by 0.2% in June, meeting expectations. Personal spending rose 0.7% in May, whose figure was revised from a previously reported gain of 0.9%. Consumer spending is the single biggest source of U.S. economic growth, accounting for as much as two-thirds of economic activity. The report also showed personal income increased 0.4% in June, above forecasts for a 0.3% increase and after rising 0.4% in May. Meanwhile, the core PCE price index inched up 0.1% in June, in line with expectations and after rising 0.1% in May. The core PCE price index rose at an annualized rate of 1.3%, above estimates for 1.2% and following a gain of 1.3% in May. The Federal Reserve uses core PCE as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
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