Gold Ends Sharply Lower On Upbeat Data, Rising Equities
Washington (Oct 23) Gold futures ended lower for a second straight session on Thursday, with investors opting for the riskier equity assets on the back of some healthy corporate earnings, following some upbeat economic data from China and the eurozone, amid a strengthening dollar.
The precious metal also lost ground due to profit taking, having surged to a six-week high at one point on Wednesday.
In some upbeat economic news from the US, the Conference Board's index of leading US economic indicators rose more than anticipated in September, suggesting moderate growth in the short-term. Meanwhile, first-time claims for US unemployment benefits increased for the week ended October 18 , but less than expected.
Elsewhere, data showing Chinese manufacturing activity in October to have increased at a faster pace also contributed to the precious metal's decline.
Nonetheless, speculations are rife the Federal Reserve may not hike interest rates anytime soon, despite recent fairly upbeat US economic data. Also, recent comments from Fed officials indicate the central bank may delay the end of its asset purchase program until at least the summer of 2015.
Expectations that the European Central Bank will soon embark on a full-scale quantitative easing to ward off deflation limited gold's losses. Increased demand for gold in Asian countries, particularly India and China , amid the ongoing festival season, is also limiting the precious metal's downside.
Meanwhile, worries about the health of eurozone banking industry have resurfaced again with reports from Spanish new agency Efe indicating that eleven banks from six euro zone countries are set to fail the stress tests, with the results due on Sunday.
Gold for December delivery, the most actively traded contract, tumbled 16.40 or 1.3% to settle at USD1,229.10 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.
Gold for December delivery scaled an intraday high of USD1,244.90 and a low of USD1,226.30 an ounce.
On Wednesday, gold futures ended at USD1,245.50 an ounce, down USD6.20 or 0.5%, with the dollar rising against some major currencies after data from the Labor Department showed US inflation to have risen marginally in September.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, edged down to 749.87 tons on Thursday, from its previous close of 751.96 tons.
The dollar index, which tracks the US unit against six major currencies, traded at 85.85 on Thursday, up from its previous close of 85.75 late Wednesday in North American trade. The dollar scaled a high of 85.94 intraday and a low of 85.66.
The euro trended lower against the dollar at USD1.2647 on Thursday, as compared to its previous close of USD1.2647 late Wednesday in North American trade. The euro scaled a high of USD1.2675 intraday and a low of USD1.2616 .
In economic news, data from the US Labor Department showed initial jobless claims to have risen by 17,000 to a seasonally adjusted 283,000 in the week ended October 18 , from the previous week's revised total of 266,000. Economists expected claims to rise to 285,000 from 264,000 originally reported in the previous week.
A report from the Conference Board showed its index of leading US economic indicators rose 0.8% in September. Economists expected the index to rise by 0.6% compared to the 0.2% uptick originally reported for the previous month.
A preliminary reading of China's HSBC manufacturing index inched up to a three-month high of 50.3 in October from 50.2 in September, above the forecasts for 50.3. However, the level of output in factories fell to a five-month low of 50.7 in October.
A report from Markit Economics showed eurozone private sector to have logged a marginal upturn in October helped by an improvement in Germany , even as France moved deeper into contraction. The headline flash Eurozone Markit composite output index rose to 52.2 in October from a 10-month low of 52 in September.
The services Purchasing Managers' Index remained unchanged at 52.4 in October when it was expected to drop to 52. The manufacturing PMI advanced to 50.7 from 50.3 in September, confounding expectations for a fall to 49.9.
Meanwhile, in Asia , a preliminary reading of China's HSBC manufacturing index inched up to a three-month high of 50.3 in October from 50.2 in September and above forecasts for 50.3. However, the level of output in factories fell to a five-month low of 50.7 in October.
Eurozone consumer confidence improved unexpectedly in October after weakening in the previous four months, preliminary data from the European Commission showed Thursday. The flash consumer confidence indicator rose to -11.1 from a seven-month low of -11.4 in September. Economists had forecast a weaker score of -12. For the EU, the consumer confidence index increased by 0.6 points to -7.4.
Elsewhere in Europe , UK retail sales declined more-than-expected in September, driven by a sharp contraction in clothing sales. Retail sales fell 0.3% in September from a month ago, when it rose 0.4%, the Office for National Statistics said Thursday. This was the first drop in four months. Economists had forecast a 0.1% drop for September.