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MTECHTIPS:-Gold struggles below $1,100 ahead of U.S. data

MTECHTIPS:-Gold struggles below $1,100 ahead of U.S. data

Gold prices struggled below the $1,100-level on Monday, as investors looked ahead to the release of key data later in the session for further indications over the timing of a U.S. rate increase and the strength of the economy. The U.S. is to release data on personal spending later in the day, while the Institute of Supply Management is to release data on manufacturing activity. Market players are also focusing on Friday’s nonfarm payrolls report. Gold futures for December delivery on the Comex division of the New York Mercantile Exchange dipped $1.80, or 0.16%, to trade at $1,093.30 a troy ounce during European 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. Gold has been under heavy selling pressure in recent weeks amid speculation the Federal Reserve will raise interest rates for the first time in nine years in the coming months. The central bank sounded more upbeat about the economy following its policy meeting last week, leaving the door open for an interest-rate hike as soon as September. 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. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.48 early on Monday, up 0.15% on the day. The dollar index rose 1.86% in July, boosted by expectations that the Federal Reserve could raise rates as soon as September if the economy continues to improve as expected. 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.
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