Gold fell more than 1 percent on Friday as U.S. data showing low inflation and improving consumer confidence dampened investor interest, with bullion on track to post sharp losses for a second consecutive month.
Open interest in U.S. gold futures fell to its lowest in almost 4 years, due to a combination of decreasing fund interest, option expiration and squaring of books after investors covered short positions.
Data showing a six-year high in consumer sentiment weighed on gold, a traditional safe haven, while funds largely remained bearish after a mid-April sell-off sent the metal to two-year lows.
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Gold had gained more than 3 percent in the prior three sessions. On Thursday, discouraging U.S. growth data and jobless claims data boosted hopes of the Federal Reserve continuing its $85 billion in monthly mortgage-bond purchases.
But for the month of May, gold was on track to fall 5.5 percent following April's decline of more than 7 percent.
"The metals were already under pressure going into the end of the month as many people have a lot of short positions outstanding, and the consumer confidence data just added fuel to selling," said Carlos Perez-Santalla at brokerage Marex Spectron.
Spot gold fell 1.5 percent to nearly $1,393 an ounce. Gold futures settled $19 lower at $1,393 per ounce.
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