Gold Drops to $1085 as Dollar Rises on Fed Rate Expectations

Gold futures settled lower on Thursday as the dollar rose after data showed the U.S. economy improved in the second quarter, supporting views the Federal Reserve would lift rates by year-end.

The U.S. Commerce Department said gross domestic product expanded at a 2.3 percent annual rate. First-quarter GDP, previously reported to have shrunk at a 0.2 percent pace, was revised up to show it rising at a 0.6 percent rate.  U.S. gold futures for August delivery closed down $4.20 at $1,088.40 an ounce.

Spot gold dropped as much as 1.3 percent to a session low of $1,081.85 an ounce in earlier trade, not far from its cheapest since February 2010 at $1,077 hit after a selloff on July 20. It was last down 0.7 percent at $1,088 an ounce.