Gold prices edged lower in European trade on Monday, as investors looked to buy into rising equity markets rather than purchasing safe-haven assets, but prices held near three-week highs amid waning expectations that the Federal Reserve will raise interest rates anytime soon.
Gold for December delivery on the Comex division of the New York Mercantile Exchange dipped $2.45, or 0.18% to trade at $1,355.05 a troy ounce by 06:55GMT, or 2:55AM ET.
On Friday, prices jumped to a daily peak of $1,362.00, the most since July 11, after data showed the U.S. economy grew much slower than expected in the second quarter, sending the dollar to five-week lows and prompting market players to roll back expectations of a rate hike from the Federal Reserve.
The advance read on second quarter GDP showed a 1.2% annualized growth rate, well below expectations for 2.6%, the Commerce Department said on Friday. First quarter GDP was revised lower to 0.8% from 1.1%.
The disappointing data lessened the threat of an early interest rate rise from the Federal Reserve. Fed funds futures are currently pricing in just a 12% chance of a rate hike by September. December odds were at 33%, down from 43% ahead of the GDP report and compared to 53% at the start of last week.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, plunged to a five-week low of 95.34 in wake of the disappointing GDP report. It was at 95.63 by early Monday.