London: Gold slipped on Friday and was on course for a sixth straight weekly fall, its longest retreat in 16 years, after upbeat US economic data encouraged bets on the Federal Reserve raising interest rates in September.

Bullion was set to end July with its biggest monthly decline in more than two years after a deep rout last week shook investor confidence further and drove prices to a five-and-a-half year low of $1,077 on July 24. The metal has lost 7.4 per cent so far for the month, its steepest decline since June 2013.

“Gold is an asset that pays no interest or coupon and the rate hike is certainly putting pressure on prices,” ING Bank senior strategist Hamza Khan said.

“We could see the fall extending to a triple-digit level, but that could trigger some buying, especially among Asian consumers.” Spot gold fell 0.6 per cent to $1,081.10 an ounce by 1147 GMT, losing 1.6 per cent for the week. US gold for August delivery dropped 0.8 per cent to $1,080.20 an ounce.

The dollar was down 0.2 against a basket of currencies, but was still on track for an almost two per cent monthly rise, making dollar-denominated bullion more expensive for foreign investors.

Data on Thursday showed the US economy grew 2.3 per cent in the second quarter, while first-quarter gross domestic product was revised to show growth of 0.6 per cent instead of a contraction.

That reinforced expectations the Federal Reserve is on track to raise interest rates, possibly at its next meeting in September. Higher interest rates would increase the opportunity cost of holding non-yielding bullion.

The data followed the Fed’s policy meeting earlier this week at which policymakers concluded that the world’s largest economy is “expanding moderately”.

The next important data release is US nonfarm payroll figures, due on August 7.

The Fed will not need to see balanced risks to the economy to proceed with an interest rate hike in September, according to former Fed officials and a review of central bank statements through recent turns in policy.

“That big overhang is enough to keep gold trading at low levels,” said Argonaut Securities analyst Helen Lau, referring to the looming US rate increase.

Waning investment demand and weak physical appetite for gold also pose a further downside risk for prices, said Lau.

“Despite trading at multi-year lows, physical demand has been on the low side with premiums in China and India hardly moving,” MKS Group trader Jason Cerisola said in a note.

On the Shanghai Gold Exchange (SGE), premiums stood at just over $1 an ounce on the London spot price, traders said.

Spot platinum fell 1.8 per cent to $969 an ounce, palladium dropped 1.5 per cent to $609 an ounce and silver was down 0.7 per cent at $14.53 an ounce.