NEW YORK—Gold futures fell as more worries about Spain's financial system and slowing growth in China sent nervous investors into the U.S. dollar, limiting demand for the precious metal as an alternative asset.
The most actively traded contract, for June delivery, fell $9.10, or 0.5%, to $1,671.50 a troy ounce on the Comex division of the New York Mercantile Exchange.
The dollar climbed against currencies of some major U.S. trading partners on economic worries about Europe and China, dragging on dollar-denominated gold by making the futures appear more expensive for buyers using other currencies.
"Gold is struggling with the stronger dollar," said Frank Lesh, a broker with FuturePath Trading.
European equities markets were rattled on Friday by the news that Spanish banks' borrowing from the European Central Bank nearly doubled in March from February, raising concerns about the supply of cash in the country's financial system.
And in China, a reading on growth came in slower than economists were expecting, a potentially worrying sign from the world's second-largest economy, and a key gold buyer. Gross domestic product grew 8.1% during the first quarter from a year earlier, slower than the 8.9% recorded in the fourth quarter and expectations for a reading of 8.3%.
"The worse-than-expected Chinese GDP numbers are weighing on sentiment," said Marc Ground, an analyst with Standard Bank, in a note. "A weaker Chinese economy could see jewelry demand fall," but it could also prompt Beijing to increase its support for the economy, "which would be to the benefit of precious metals."
Gold futures settled at their highest price in more than two weeks on Thursday, buoyed by expectations that the Federal Reserve would hold to its accommodative monetary policies after comments in recent days from a pair of key leaders at the central bank.
Such easy-money policies can send investors into gold and other precious metals as a hedge against the potential weakness they can bring to paper currencies.
