Gold Ends Lower On Upbeat US Data, Draghi Comments
Washington (Nov 6) Gold futures ended lower for a seventh straight session on Thursday, amid growing speculation about US interest rate hikes after some upbeat data from the US showed initial claims for unemployment benefits to have declined more than expected last week.
A report from the Labor Department on Thursday showed initial jobless claims for unemployment benefits in the US pulled back more than expected in the week ended November 1 , after having increased in each of the two previous weeks.
In a separate report, the Labor Department said US labor productivity increased more than expected in the third quarter, reflecting another notable uptick in output.
The dollar also firmed up further after European Central Bank President Mario Draghi indicated the use of unconventional measures if need be to prop up the eurozone economy. The European Central Bank has left its key lending rate unchanged at 0.05%.
Draghi said ECB policy makers are unanimously committed to using unconventional measures if needed to maintain price stability, and could use outright QE if deemed necessary. Draghi offered a downbeat assessment of the eurozone economy, with risks to the outlook skewed to the downside. He also highlighted geopolitical risks that could dampen confidence.
Investors also await the US non-farm payrolls report due Friday, which is expected to provide cues as to the strength of recovery in the labor market.
Gold for December delivery, the most actively traded contract, dropped USD3.10 or 0.3% to settle at USD1,142.60 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.
Gold for December delivery scaled an intraday high of USD1,149.00 and a low of USD1,137.20 an ounce.
On Wednesday, gold futures plunged USD22.00 or 1.9% to USD1,145.70 an ounce, extending losses to a sixth successive session. The precious metal was dragged down by strong equity markets, a strengthening dollar amid diverging interest rate outlooks for the US and Europe , as well as data showing a bigger than expected addition in US private sector jobs.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, edged lower to 735.82 tons on Thursday, from its previous close of 738.81 tons on Wednesday.
The dollar index, which tracks the US unit against six major currencies, traded at 87.92 on Thursday, up from its previous close of 87.48 late Wednesday in North American trade. The dollar scaled a high of 87.95 intraday and a low of 87.13.
The euro trended lower against the dollar at USD1.2401 on Thursday, as compared to its previous close of USD1.2485 late Wednesday in North American trade. The euro scaled a high of USD1.2533 intraday and a low of USD1.2398 .
In economic news from the US, data from the Labor Department showed initial jobless claims to have pulled back more than expected in the week ended November 1 , at 278,000, down 10,000 from the previous week's revised level of 288,000.
A report from the US Labor Department showed productivity to have climbed 2.0% in the third quarter following an upwardly revised 2.9% increase in the second quarter. Economists expected productivity to increase by about 1.5%, compared to 2.3% growth reported for the previous quarter.
Meanwhile, the European Central Bank today left its key lending rate unchanged at 0.5%. The deposit rate has been left untouched at minus 0.2%.
In economic news from the eurozone, German factory orders were up 0.8% month-on-month in September, coming back fairly strongly after recording a 4.2% decline in the preceding month. However, the increase in September fell short of forecasts for a 2.2% expansion.
Germany's construction sector grew for the first time in seven months during October, led by increased housing and commercial activity, a survey from Markit Economics showed Thursday. The purchasing managers' index for the construction sector climbed to a seven-month high of 51.5 in October from 50 in September.
The Bank of England today kept its interest rate unchanged at a historic-low of 0.5% and quantitative easing at GBP 375 billion as widely expected by economists.
The leading index for Japan rose more-than-expected in September, a preliminary report from the Cabinet Office showed Thursday. The index increased to 105.6 in September from 104.4 in August, slightly more than the 105.5 score projected by economists.
The Organization for Economic Co-operation and Development's in its Economic Outlook said global growth is expected to accelerate gradually if countries implement growth supportive policies. The OECD projects global GDP growth to reach a 3.3% rate in 2014 before accelerating to 3.7% in 2015 and 3.9% in 2016.
The US is expected to expand 2.2% this year and around 3% in 2015 and 2016. Growth in the euro area is expected to pick up slowly, from 0.8% in 2014 to 1.1% in 2015 and 1.7% in 2016.