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MTECHTIPS:-Gold languishes near 5-1/2 year low on September rate hike fears

MTECHTIPS:-Gold languishes near 5-1/2 year low on September rate hike fears

Gold prices struggled near a five-and-a-half year low on Tuesday, amid ongoing expectations for a September U.S. rate hike. Gold futures for December delivery on the Comex division of the New York Mercantile Exchange dipped $1.30, or 0.12%, to trade at $1,088.10 a troy ounce during European morning hours after hitting a session low of $1,080.30 overnight. A day earlier, gold declined $5.70, or 0.52%, to close at $1,089.40. 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. 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 factory orders later Tuesday. Market players are also focusing on Friday’s nonfarm payrolls report. Data on Monday showing that manufacturing activity weakened in July and consumer spending rose at its slowest pace in four months in June did little to alter expectations for a September rate hike.
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