Investing.com - Gold extended losses to hit the lowest levels of the session on Tuesday, after data showed the U.S. economy grew less than initially expected in the third quarter, but still beat expectations.
Gold for February delivery on the Comex division of the New York Mercantile Exchange shed $5.00, or 0.46%, to trade at $1,075.60 a troy ounce during U.S. morning hours.
The Commerce Department said gross domestic product grew 2.0% in the three months ended September 30, better than expectations for 1.9%. Preliminary data initially pegged U.S. growth at 2.1% in the third quarter. The U.S. economy grew 3.9% in the second quarter.
The data showed personal consumption rose 3.0% in the third quarter, above forecasts for 2.9% and unchanged from an initial estimate. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
The better than forecast data fueled speculation the U.S. economy is strong enough to warrant further interest rate hikes in 2016.
A day earlier, gold hit $1,081.40, the most since December 9, before ending at $1,080.60, up $15.60, or 1.46%. That followed a rally of $15.40, or 1.47%, on Friday. Gold gains came due to a weaker dollar and expectations of measured monetary policy tightening from the Federal Reserve.
A gradual path to higher rates poses less of a threat to gold prices than a swift series of increases.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% at 98.14 early Tuesday, moving further away from last week's two-week peak of 99.33.
The yellow metal is on track to post an annual decline of 10% in 2015, the third yearly loss in a row, as speculation over the timing of a Fed rate hike dominated market sentiment for most of the year. Rising interest rates historically have been bad news for gold, which can't compete with the higher interest rates offered by other assets.
Meanwhile, silver futures for March delivery declined 2.0 cents, or 0.14%, to trade at $14.29 a troy ounce. Silver prices sank to $13.62 on December 14, a level not seen since August 2009.
Elsewhere in metals trading, copper dipped on Tuesday, but held near the prior session's five-week peak as a softer U.S. dollar and speculation that Chinese producers will scale back production to combat falling prices provided support.
Copper is on track to post an annual decline of 27% in 2015 as fears of a China-led global economic slowdown spooked traders and rattled sentiment.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
Trading volumes are expected to remain light in the coming days due to the Christmas holiday and as many traders already closed books before the end of the year, reducing liquidity in the market and increasing volatility.