* Fed says U.S. economy "expanding moderately"
* U.S. Q2 GDP expands at 2.3 percent rate
(Updates prices, adds comment)
By Clara Denina
LONDON, July 30 (Reuters) - Gold fell 1 percent on Thursday
to a near a 5-1/2-year low as the dollar rose after data showed
the U.S. economy improved in the second quarter, supporting
views the Federal Reserve would lift rates by year-end.
The U.S. Commerce Department said gross domestic product
expanded at a 2.3 percent annual rate. First-quarter GDP,
previously reported to have shrunk at a 0.2 percent pace, was
revised up to show it rising at a 0.6 percent rate.
ID:nLNNUIEBDP
Spot gold XAU= dropped as much as 1.3 percent to a session
low of $1,081.85 an ounce in earlier trade, not far from its
cheapest since February 2010 at $1,077 hit after a selloff on
July 20. It dropped 1.1 percent to $1,084.21 by 1337 GMT.
"$1,080 and $1,050 are critical technical support levels. I
don't know if there are big stops below there but the market is
nervous about a further bear raid and prices remain under
pressure," bullion broker Sharps Pixley head Ross Norman said.
After a two-day meeting, Fed policymakers said the economy
had overcome a first-quarter slowdown and was "expanding
moderately". A Reuters poll showed the U.S. economy may have
rebounded in the second quarter. ID:nTLATIEB24
That buoyed the dollar, up 0.4 percent against a basket of
leading currencies, making dollar-priced gold more costly for
non-U.S. buyers.
U.S. gold for August delivery GCcv1 slipped 0.8 percent to
$1,083.90 an ounce.
"The Fed yesterday gave a stronger hint of a
sooner-rather-than-later rate hike and the dollar strengthened
and that impacts all the commodities," Citigroup (NYSE:C) strategist
David Wilson said.
"As the focus is back on the dollar and its strength, the
trajectory for gold is down until a hike actually happens."
"We think that the Fed will adopt a gradual pace of
tightening, we expect only one rate hike this year. And policy
will continue to be conditioned on data," Mizuho Bank said in a
note.
Holdings of the largest gold-backed exchange-traded fund,
New York's SPDR Gold Trust GLD , were unchanged at 21.87
million ounces for a second day on Wednesday. That level is the
lowest since September 2008. GOL/ETF
Spot platinum XPT= was down 0.2 percent at $980.50 an
ounce, within reach of a 6-1/2-year low of $942.49 hit in the
previous week. Palladium XPD= was up at $619 an ounce and
silver XAG= dropped 0.1 percent to $14.71 an ounce.