Gold futures plunged Friday amid a general drop in commodity prices, as the dollar consolidated recent gains. Traders have come to realize that the end of easy money is near, the Federal Reserve is set to raise interest rates four times this year and the European Central Bank will wind down its bond-buying program.
With the U.S. economy set to grow about 4% in the second quarter, safe haven demand for gold has waned significantly. Just this week, data showed U.S. retail sales jumped by 0.8 percent in May after climbing by an upwardly revised 0.4 percent in April. Growth in New York manufacturing activity unexpectedly accelerated in the month of June, according to a report released by the Federal Reserve Bank of New York on Friday.
The New York Fed said its general business conditions index climbed to 25.0 in June from 20.1 in May, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to edge down to 19.0. August gold dropped $ 29.80, or 2.3%, to settle at $ 1,278.50/oz the lowest since December.