Azernews.Az

By Bloomberg

Gold headed for its biggest monthly drop in two years as the U.S. economy expanded at a faster pace in the second quarter, bolstering expectations of a rate rise this year.

Bullion for immediate delivery fell 0.3 percent to $1,085.45 an ounce at 11:31 a.m. in Singapore, according to Bloomberg generic pricing. It’s plunged 7.4 percent this month after last week falling to $1,077.40, the lowest since February 2010.

The dollar was little changed and set for its best month since January as speculation firmed that the Federal Reserve will boost interest rates at its next meeting. Increasing rates curbs the appeal of gold as the metal doesn’t pay interest or give returns like competing assets such as equities and bonds.

“Gold prices will follow a downward trajectory from here to the second half of next year,” said Vyanne Lai, an economist at National Australia Bank Ltd. in Melbourne. Prices declined as the dollar strengthened, on the outlook for rate rises and amid weaker demand for physical gold, Lai said.

Gold for December delivery, the contract with the most open interest, fell 0.4 percent to $1,084.60 an ounce on the Comex in New York.

Silver for immediate delivery declined 0.3 percent to $14.7054 an ounce. Platinum dropped 0.4 percent to $985.74 an ounce. Palladium fell 0.2 percent to $620.35 an ounce.