The price of gold was extending losses for a seventh straight session Friday morning, with the US dollar trading firm versus a basket of currencies after San Francisco Federal Reserve President John Williams indicated that the Fed may slow the pace of its asset purchases as early as this summer if labor market indicators continue to improve.
Gold for June delivery, the most actively traded contract, shed $9.50 to $1,377.40 an ounce. Yesterday, gold extended losses for a sixth-straight session following a decline in U.S. inflation rate, even as the dollar dropped against some major currencies on a slew of weak macroeconomic data out of the U.S. A Labor Department report on Thursday showed U.S. consumer price inflation to have dropped more than expected in April, due mainly to a substantial decline in energy prices. Gold normally tends to gain in an inflationary environment and loses out in deflationary conditions.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 1,041.42 tons from 1,047.13 tons.
Meanwhile, the U.S. dollar was hovering near its 6-week high versus the euro and its 3-week high against sterling. The buck was extending its 4-year high versus the yen, while trading around its 10-month high against the Swiss franc.
In economic news, euro zone construction output continued its decline for the fifth month in a row in March, Eurostat reported. Production in construction fell at a faster pace of 1.7 percent, following a 0.3 percent drop in February. Building construction and civil engineering slid 1.4 percent and 2.4 percent, respectively. On a yearly basis, overall construction output plunged 7.9 percent, reversing last month's 1.7 percent increase.
Elsewhere, the prices of silver and platinum were moving lower morning deals.
From the U.S., Reuters and the University of Michigan will release the preliminary reading of their consumer sentiment index for May at 9:55 a.m. ET. Economists expect an increase in the index to 78 in May from 76.4 in April.
A little later, the Conference Board will release its U.S. leading economic indicators index for April. The consensus expectations call for a 0.3 percent increase in the index following a 0.1 percent drop in March.
