Gold Ends Higher On Soft U.S. Data
San Francisco (Oct 15) Gold futures ended higher for a third straight session on Wednesday, as the dollar slipped on some disappointing economic data from the U.S. with investors continuing to seek the safe haven appeal of the precious metal, amid an alarming drop in global stocks and a flood of gloomy economic forecast.
In some soft economic news from the U.S., a Commerce Department report showed retail sales to have dropped more than anticipated in September, partly reflecting the recent drop in gasoline prices. A Labor Department report showed an unexpected drop in U.S. producer prices in September, reflecting lower prices for food and energy.
Meanwhile, business activity in the New York manufacturing sector grew at a substantially slower rate in October, a Federal Reserve Bank of New York report showed Wednesday.
The prospect of U.S. interest rate hikes has some traders fretting over a slowdown here as well.
Gold for December delivery, the most actively traded contract, gained $10.50 or 0.9 percent to settle at $1,244.80 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
Gold for December delivery scaled an intraday high of $1,250.30 and a low of $1,222.00 an ounce.
On Monday, gold ended higher with investors turning to the precious metal for its safe haven appeal even as the dollar trended higher. As well yesterday, Europe's economic engine Germany projected some anemic growth for the next two years.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 761.23 tons from its previous close of 759.44 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.12 on Wednesday, down from its previous close of 85.88 late Tuesday in North American trade. The dollar scaled a high of 86.01 intraday and a low of 84.80.
The euro trended higher against the dollar at $1.2787 on Wednesday, as compared to its previous close of $1.2659 late Tuesday in North American trade. The euro scaled a high of $1.2885 intraday and a low of $1.2626.
On the economic front, data from the U.S. Commerce Department showed retail sales to have dropped by a more than expected 0.3 percent in September.
Meanwhile, a report from the Labor Department showed producer prices in the U.S. to have unexpectedly dropped 0.1 percent in September, after coming in unchanged in August.
The New York Fed said its headline general business conditions index tumbled to 6.2 in October from 27.5 in September. While a positive reading indicates continued growth in the sector, economists had expected the index to show a much more modest decrease to 20.5.
A Commerce Department report on Wednesday showed business inventories in the U.S. to have increased less than expected in August, with business sales also pulling back. Business inventories edged up by 0.2 percent in August after climbing 0.4 percent in July. Economists expected inventories to increase 0.4 percent.
In economic news from the eurozone, a leading German economic indicator dropped 1 percent month-over-month in August, following the 0.5 percent decline in July, raising further concerns about the largest economy in the zone.
Elsewhere, British jobless rate dropped to its lowest since late 2008 and unemployment declined below 2 million as robust economic growth created more jobs during June to August, data from the Office for National Statistics showed Wednesday. The ILO jobless rate dropped to 6 percent during June to August, the lowest since late 2008 and dropped from the 6.5 percent seen in the March to May period. Economists had forecast a rate of 6.1 percent.
Chinese consumer prices slowed slightly more than expected in September, data from the National Bureau of Statistics showed Wednesday. Consumer prices grew 1.6 percent year-over-year in September following the 2 percent rise in August. Economists had expected inflation to slow to 1.7 percent.