Gold prices increased further on Friday as a surprise contraction in the U.S. GDP, for the second quarter in a row, strengthened hopes that the Fed would have to tone down its hawkish stance on taming inflation.
Data released on Thursday had showed the U.S. economy contracting by 0.90 percent in the June quarter, versus expectations of a 0.50 percent growth. In the first quarter, the GDP had contracted by 1.60 percent.
Gold prices have been increasing ever since markets started perceiving that the Fed would have to tread a softer path on interest rates, given the challenges arising on the growth front.
Lending support to the dollar denominated prices of the yellow metal was a retreating Dollar. The Dollar weakened against major currencies, dragging down the Dollar Index below the 106 level, versus the recent peak of 109.29 scaled a fortnight earlier.
Gold Futures for August settlement rose 6.8 points to trade at $1,757.10, up 0.39 percent on an overnight basis. Prices oscillated between $1,751.40 and $1,765.85.
Fears of a recession and stagflation have spurred buying in the safe-haven yellow metal. At the day's high of $1765.85, gold prices returned to the level last traded on July, 6.
