Gold Ends Lower On Upbeat U.S. Data
New York (Sept 26) Gold futures ended lower on Friday, as the dollar trended higher on some upbeat economic news from the U.S. with its second quarter gross domestic product data growing more than previously estimated.
Gold has lost some of its appeal as an inflation hedge of late, with recent U.S. data showing few signs that consumer prices are set to jump.
A Commerce Department report on Friday showed economic activity in the U.S. grew faster than previously estimated in the second quarter of 2014, with the upwardly revised growth matching economist estimates.
With talk of the Federal Reserve hiking interest rates earlier than forecast, analysts say gold will have trouble rising from current levels.
The Fed may begin hiking interest rates as early as the spring of 2015, Richard Fisher, president of the Federal Reserve Bank of Dallas said earlier this week.
"It's assumed in the market place that we'll start our liftoff in raising interest rates some time between the spring and the summer," Fisher said at a conference in Rome.
"I won't say what we're saying internally, that would not be appropriate, but maybe sooner rather than later," he said.
Gold for December delivery, the most actively traded contract, dropped $6.50 or 0.5 percent to settle at $1,215.40 an ounce on the Comex division of the New York Mercantile Exchange on Friday.
Gold for December delivery scaled an intraday high of $1,232.70 and a low of $1,212.80 an ounce.
On Thursday, gold futures ended higher tracking some largely declining global equity markets on a couple of soft economic data out of the U.S., with the dollar trended higher.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 773.45 tons from its previous close of 774.65 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.64on Friday, up from its previous close of 85.18 late Thursday in North American trade. The dollar scaled a high of 85.66 intraday and a low of 85.11.
The euro trended lower against the dollar at $1.2685 on Friday, as compared to its previous close of $1.2751 late Thursday in North American trade. The euro scaled a high of $1.2761 intraday and a low of $1.2680.
On the economic front, a report from the Commerce Department showed economic activity in the U.S. grew faster than previously estimated in the second quarter of 2014, with the upwardly revised growth matching economist estimates. U.S. GDP in the second quarter rose 4.6 percent compared to the previously reported 4.2 percent growth. This was in line with economists' consensus estimate, and reflects a significant turnaround from the 2.1 percent contraction seen in the first quarter.
According to a report from Thomson Reuters and the University of Michigan, consumer sentiment index for September came in at 84.6, unchanged from the preliminary estimate and above the final August reading of 82.5.
The leading index for Eurozone declined in August, following an increase in July, a Conference Board survey showed Friday. The leading index fell 0.6 percent month-over-month in August, after the 0.3 percent increase in July. The index has remained unchanged in June.
A leading index for China's economy slowed in August but continued to expand, the Conference Board revealed on Friday with a 0.7 percent gain. That follows the 1.2 percent increase in July and the 1.3 percent gain in June.
German consumer sentiment is set to deteriorate in October on continued tensions regarding the geopolitical situation, a survey by market research group GfK revealed Friday. The forward-looking consumer confidence index dropped to 8.3 in October from 8.6 in September. It was forecast to drop marginally to 8.5.