Bullion metals end moderately lower
London (Mar 28) Strong dollar puts pressure on precious metals
Bullion metals ended moderately lower on Thursday, 27 March 2014. Gold futures lost their hold on the $1,300-an-ounce mark on Thursday to settle at their lowest level in more than six weeks as the dollar edged higher in the wake of better-than-expected economic data, prompting the metal to lose some of its investment appeal.
Gold for April delivery fell $8.70, or 0.7%, to settle at $1,294.70 an ounce on the Comex division of the New York Mercantile Exchange.
May silver also declined by 7 cents, or 0.4%, to $19.71 an ounce.
The ICE dollar index, which measures the U.S. currency against a basket of six major rivals, edged higher on Thursday, also putting pressure on dollar-denominated gold.
The Russia-Ukraine tensions have not escalated significantly recently, but the situation remains a concern to the world market place. While the U.S. is leading a worldwide effort to isolate Russia after its annexation of Crimea, reports Thursday said Russian economic growth is set to slow to the weakest rate in years. This entire matter is likely to become a longer-term bullish underlying factor for safe-haven gold. Meantime, the IMF has agreed to loan Ukraine up to $18 billion to help out that nation's struggling economy, after the Russian incursion.
The markets paid little attention to news late Wednesday that some U.S. and world banks, including Citi, failed a government stress test due to inadequate capital plans. Those banks will have to resubmit new capital plans to the Federal Reserve.
U.S. economic data out Thursday included the weekly jobless claims report, the third-quarter GDP estimate, the Kansas City Fed manufacturing survey, and pending home sales. This data set was generally upbeat, which was a bearish underlying factor for the precious metals.
In details, Fourth quarter GDP was revised up to 2.6% in the third estimate from 2.4% in the second estimate. That matched the consensus estimate, but was down from a 4.1% gain in Q3 2013. Real final sales increased 2.7% in the fourth quarter. That was up from a 2.5% gain in Q3 2013 and above the previously reported 2.3% gain. It was also the strongest increase in real final sales since increasing 3.4% in Q2 2012. Looking at real final sales over the last four quarters (0.2%, 2.1%, 2.5%, and 2.7%), there is a definite upward moving trend. The year-over-year averages, however, put it below the 2.0% and 2.6% gains from 2011 and 2012.
The initial claims level fell to 311,000 for the week ending 22 March from an upwardly revised 321,000 (from 320,000) for the week ending 15 March. The consensus expected the initial claims level to increase to 330,000. Pending home sales for February fell 0.8%, which was worse than the 0.2% decrease forecast by the consensus. Today's reading followed last month's revised decrease of 0.2% (from +0.1%).