Gold Ends Higher As Dollar Weakens
Gold futures snapped a two-day loss to end higher on Friday, as most global equity markets declined and the dollar trended lower against a basket of major currencies, with the U.S. employment report for December showing a slowdown in wage growth.
While employment in the U.S. grew more than expected in December, investors were disappointed by a slowdown in wage growth. With employment rising more than expected, the unemployment rate also dipped to its lowest level in well over six years.
Analysts believe the slowdown in wage growth could have the Fed rethink on an early hike in rates, which is an advantage for gold. The precious metal's safe haven appeal had driven prices to its highest since mid-December earlier this week.
A stronger dollar has put a lid on gold's rally this week, with the greenback surging to its highest in nine years versus major rivals on expectations that the Federal Reserve will hike interest rates by mid-2015.
Gold for February delivery, the most actively traded contract, gained $7.60 or 0.6 percent to settle at $1,216.10 an ounce on the Comex division of the New York Mercantile Exchange on Friday.
Gold for February delivery scaled an intraday high of $1,221.00 and a low of $1,207.00 an ounce.
On Thursday, gold prices ended at $1,208.50 an ounce, down $2.20 or 0.2 percent, as investors turned to riskier equity assets while continuing to weigh the Federal Reserve policy meet minutes. The dollar ticked higher against some major currencies after the Fed expressed confidence of that the U.S. economic recovery will continue into 2015.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 704.83 tons on Friday from its previous close.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 91.96 on Friday, down from its previous close of 92.32 late Thursday in North American trade. The dollar scaled a high of 92.50 intraday and a low of 91.90.
The euro trended lower against the dollar at $1.1841 on Friday, as compared to its previous close of $1.1793 late Thursday in North American trade. The euro scaled a high of $1.1846 intraday and a low of $1.1765.
In economic news, the U.S. Labor Department said non-farm payroll employment climbed by 252,000 jobs in December compared to economist estimates for an increase of about 245,000 jobs.
The report also showed that employment rose even more than previously estimated in the two previous months. Employment rose by a revised 261,000 jobs in October and 353,000 jobs in November, reflecting a net upward revision of 50,000 jobs.
The stronger than expected job growth helped to push the unemployment rate down to 5.6 percent in December from 5.8 percent in November. Economists expected unemployment rate to dip to 5.7 percent.
Wholesale inventories in the U.S. rose much more than expected in November, a report from the Commerce Department showed Friday, although wholesale sales dropped. The wholesale inventories climbed by 0.8 percent in November after rising by an upwardly revised 0.6 percent in October. Economists expected wholesale inventories to edge up by 0.3 percent following the 0.4 percent increase originally reported for the previous month.
U.K. industrial production dropped by an unexpected 0.1 percent from October, when output decreased 0.3 percent. Economists had forecast industrial output to grow 0.2 percent. The decline was due mainly to a a slump in oil and gas extraction, even as manufacturing rebounded from the prior month.
Meanwhile, visible trade gap in the U.K. dropped to GBP 8.8 billion in November from GBP 9.8 billion in October. It was expected to decrease to GBP 9.5 billion.
U.K. construction output fell 2 percent from October, while economists forecast a 1.2 percent increase. Output was down 1.9 percent in October. The decline in November was due to a drop in all new work and repair and maintenance, data from the Office for National Statistics revealed Friday.
German industrial production and exports declined in November, indicative of a struggle to achieve sustainable recovery. Industrial output in November was down unexpectedly by 0.1 percent from October, the first fall in three months. Economists had forecast a 0.3 percent rise following October's 0.6 percent growth.
China's consumer prices inflation picked up speed in December from the five-year low in the previous month, data from the National Bureau of Statistics showed Friday. Annual consumer prices inflation quickened to 1.5 percent in December from the five-year low of 1.4 percent in November. This matched the expectations of economists.