Gold prices dropped further to fresh five-and-half-year lows on Friday, posting losses for six consecutive weeks and recording its longest weekly losing streak in the past 16 years.
In the international markets, gold prices traded at around $1,085 an ounce, down 0.3%. The yellow metal prices have dropped over 1% in the week. Overall, the prices are down 7.5% since the beginning of the month.
The losses were fuelled by a positive economic data in the US that further strengthened expectations of interest rate hike by the country's central bank in September.
An official data showed that the US economy posted a growth of 2.3% in the June quarter, mainly driven by strong consumer spending.The first quarter gross domestic product (GDP) growth was also revised to 0.6% from a contraction.
The upbeat data supported the dollar and weighed on the gold prices.
"The second-quarter US GDP data support the Fed's more upbeat tone on economic conditions and suggests that the economy could cope with higher interest rates," said Capital Economics in a note.
The data further raised expectations that the US Federal Reserve may start normalising policy rates as early as September, even though it did not any give hints on the timing of rate hikes at this week's meeting.
"Our baseline scenario remains that the first Fed rate hike will take place in September," said Barclays Capital.
In the domestic markets too, the precious metal prices traded lower at Rs 24,577 per 10 grams, down 0.57%. The prices have fallen by over 27% in the past nine months, declining from a high of Rs 34,000 per 10 grams.
Besides concerns over a rate rise in the US, gold prices are expected to remain under pressure due to its losing appeal as safe haven and slowing demand for the metal in the world's second largest consumer China.
The recent crisis in Greece and a crash in Chinese stock market failed to give a lift to the gold prices.