Gold prices edged lower on Wednesday, as optimism about solid U.S. economic growth and a steady dollar amid expectations of interest rate hikes weighed down the yellow metal.
Persisting worries about U.S.-China trade tensions contributed as well to gold’s weakness.
After the U.S.-Mexico deal earlier this week, the U.S. and Canada are negotiating the way forward. U.S. President Donald Trump has stated that his administration would raise tariffs on imports of Canadian cars if a deal could not be reached.
Meanwhile, in roughly another month’s time, the next round of U.S tariffs on $200 billion worth of Chinese goods are set to take effect, and it is almost certain that China will retaliate in equal measure by imposing tariffs on imports of goods into China from the U.S.
The greenback’s initial strength on the back of encouraging economic data pushed down the prices of the yellow metal. The dollar subsequently retreated into negative territory. The dollar index dropped to 94.50, after having surged to 94.86 earlier.
Gold futures for December settled at $1,211.50 an ounce, down $2.90, or 0.24%, from previous close.
On Tuesday, gold futures declined $1.60, or 0.1%, to $1,214.40 an ounce.
Silver futures for September ended down $0.077, at $14.697 an ounce.
Copper futures for September declined $0.0260 to settle at $2.7100 per pound.
In U.S. economic news, a report from the Commerce Department showed economic activity in the country to have grown by more than initially estimated in the second quarter, with real GDP climbing by 4.2%, compared to the previously reported 4.1% increase. Growth was expected to be downwardly revised to 4.0%.
With the unexpected upward revision, the GDP growth in the second quarter reflects a significant acceleration from the 2.2% advance in the first quarter.
Meanwhile, a report from the National Association of Realtors showed an unexpected pullback in pending home sales in the month of July. NAR said its pending home sales index dropped by 0.7% to 106.2 in July after jumping by 1.0% to an upwardly revised 107.0 in June. Economists had expected pending home sales to rise by 0.3%, compared to the 0.9% increase originally reported for the previous month.
Pending home sales in July were down by 2.3% compared to the same month a year ago, reflecting the seventh straight year-over-year decrease.
Data released by the Conference Board on Tuesday showed U.S. consumer confidence to have surged to a near 18-month high in August. However, June home prices indicated slowing growth.