Gold Ends Lower On Strong Dollar, Data
Gold futures ended lower Wednesday, as the dollar strengthened against a basket of some major currencies even as investors digested some macroeconomic data out of the U.S. with initial jobless benefit claims declining last week. The precious metal pared some of the losses after pending home sales in the U.S. dropped more than expected in August. Nevertheless, investors continued to monitor the U.S. Government’s progress on its budget and debt ceiling, which will reach its borrowing limit of $16.7 trillion mid October. The debt ceiling has to be raised by Congress by that time, but currently there is no consensus between the White House and the Republican lawmakers on the issue.
Economic activity in the U.S. increased at an unrevised rate in the second quarter, according to the Commerce Department’s final estimate on gross domestic product in the quarter. Meanwhile, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits unexpectedly decreased in the week ended September 21. Gold for December delivery, the most actively traded contract, dropped $12.10 or 0.9 percent to close at $1,324.10 an ounce Thursday on the Comex division of the New York Mercantile Exchange. Gold for December delivery scaled an intraday high of $1,340.00 and a low of $1,319.20 an ounce. Yesterday, gold snapped a three-day loss to end sharply higher on its safe haven appeal after the dollar weakened against a basket of major currencies and investors continued to fret over a possible government shutdown in Washington linked to budget and debt ceiling.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged at 909.59 tons. The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.58 on Thursday, up from 80.34 late Wednesday in North American trade. The dollar scaled a high of 80.65 intraday and a low of 80.31. The euro traded lower against the dollar at $1.3480 on Thursday, as compared to its previous close of $1.3526 late Wednesday in North America. The euro scaled a high of $1.3529 intraday and a low of $1.3474.
In economic news from the U.S., the Labor Department said initial jobless claims fell to 305,000 in the week ended September 21, a decrease of 5,000 from the previous week’s revised figure of 310,000. The modest decrease came as a surprise to economists, who had expected jobless claims to climb to 325,000 from the 309,000 originally reported for the previous week. Separately, the Commerce Department noted that US GDP increased by 2.5 percent in the second quarter, unchanged from the previous estimate. Economists had expected the pace of growth to be upwardly revised to 2.6 percent. The pace of GDP growth in the second quarter still represents a notable acceleration from the 1.1 percent growth reported for the first quarter.
Meanwhile, the National Association of Realtors said its pending home sales index eased 1.6 percent to 107.7 in August from a downwardly revised 109.4 in July. Economists had been expecting the index to decrease by about 1.0 percent.
Elsewhere, eurozone broad money supply growth accelerated in August, while loans to private sector declined further, the European Central Bank said. The broad monetary aggregate M3 grew 2.3 percent from a year ago, in line with forecast, after rising 2.2 percent in July.
Confidence among French consumers improved for a third consecutive month to reach a seven-month high in September, the latest figures from the statistical office Insee showed. The headline consumer confidence index rose to 85 in September from 84 in August. The outcome was in line with expectations. The reading was the highest since February, when the index scored 86.
Source: RTT Staff Writer