Investing.com - Gold futures fell on Thursday even after data revealed the U.S. economy contracted much more than expected in the first quarter, likely the product of rough winter weather and less a product of a slumping economy.
Expectations held firm that the Federal Reserve remains on course to wind down stimulus measures as the year unfolds, which kept gold in negative territory.
Monetary stimulus tools such as the Fed's monthly asset-purchasing program weaken the dollar by suppressing longer-term interest rates, making gold an attractive hedge as long as they remain in place.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at 1,255.30 a troy ounce during U.S. trading, down 0.35%, up from a session low of $1,251.60 and off a high of $1,260.60.
The August contract settled down 0.47% at $1,259.70 on Wednesday.
Futures were likely to find support at $1,237.50 a troy ounce, the low from Jan. 30, and resistance at $1,304.10, last Thursday's high.
The Bureau of Economic Analysis revealed earlier that the U.S. gross domestic product contracted 1.0% in the first quarter, after a preliminary estimate showed growth of 0.1%.
Market expectations had been for a 0.5% contraction. It was the first decline in U.S. GDP since the first quarter of 2011.
Still, the report did contain some positive data.
Consumer spending, which drives more than two-thirds of U.S. economic activity, increased by 3.1%, up from the preliminary estimate of 3.0%.
Sentiments that rough winter weather bruised the economy in the first three months of the year as opposed to a major drop in demand supported the greenback as well, which softened gold as the two assets tend to trade inversely with one another.
Elsewhere, the National Association of Realtors reported that its pending home sales index rose 0.4% in April, missing expectations for a 1% gain.
Separately, the Department of Labor said the number of individuals filing for unemployment assistance in the U.S. last week fell by 27,000 to 300,000, exceeding expectations for a decline of 9,000.
Meanwhile, silver for July delivery was down 0.22% at $19.017 a troy ounce, while copper futures for July delivery were down 0.88% at $3.146 a pound.