Gold drops over 1pc as upbeat US data lifts dollar

Gold prices slipped more than 1 per cent on Thursday, weighed down by a stronger dollar and an uptick in bond yields after stronger-than-expected US economic data, reports Reuters.

Spot gold dropped 1.3 per cent to $1,945.49 per ounce by 09:45 am EDT (1345 GMT), retreating from a one-week peak hit earlier in the session. US gold futures fell 1.3 per cent to $1,944.70.

"There was a one and two punch on gold with a better-than-expected initial claims numbers showing that the strength of the US labour market is resilient," said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

"Then also that surprise upside expectation in GDP data as well shows you that if there is any recession, it's just not no one seeing it right now. So it paves the way for higher for longer on interest rates."

Data showed the U.S. economy grew faster than expected in the second quarter as labor market resilience underpinned consumer spending.

A separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 221,000 for the week ended July 22.

Following the data, the dollar index jumped 0.7 per cent against its rivals, making gold more expensive for other currency holders. The benchmark U.S. 10-year yield climbed to 3.90 per cent.