Investing.com - Gold prices edged lower in European trade on Thursday, as investors evaluated the likelihood that the Federal Reserve will raise interest rates this year, with no major new economic indicators due until Friday's highly anticipated retail sales report.
Gold for December delivery on the Comex division of the New York Mercantile Exchange shed $4.05, or 0.3%, to trade at $1,347.85 a troy ounce by 06:55GMT, or 2:55AM ET.
A day earlier, gold tacked on $5.20, or 0.39%, as market players pushed back expectations for the next U.S. rate hike, weighing on the dollar.
Fed funds futures prices showed traders now see a 40% chance of a U.S. rate hike by December, according to CME Group's (NASDAQ:CME) Fed Watch tool. That compares with around 50% at the start of the week. September odds were at around 9% early on Thursday, down from 20% a few days ago.
Gold is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.67 in early trade, not far from the prior session's one-week low of 95.37.
The yellow metal flirted with a more than two-year high above the $1,370-level earlier this month before coming under pressure as last week's robust U.S. employment report revived speculation of a U.S. interest rate hike in the coming months.
Gold is up nearly 26% on the year so far, boosted by concerns over global growth and expectations of monetary stimulus.
Also on the Comex, silver futures for September delivery dipped 10.2 cents, or 0.51%, to trade at $20.06 a troy ounce during morning hours in London, while copper futures gained 0.8 cents, or 0.37%, to $2.179 a pound.
China is set to release data on industrial production, fixed asset investments and retail sales on Friday.
Disappointing trade figures combined with softer inflation released earlier this week confirmed there was scope for further policy easing if needed.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.