Gold Price Ends At 5-Year Low On China Reserves, Rate Hike Expectation
New York (July 17) Gold futures slipped for a seventh straight session to end at a more than five-year low on Friday, after China for the first time revealed its gold reserves since 2009, which was below expectations.
The prospect of an imminent rate hike from the Federal Reserve also dented gold's appeal as a hedge against inflation. Gold prices fell sharply lower earlier this week as Fed Chair Janet Yellen delivered hawkish remarks and have since failed to rebound.
For the week, gold futures shed about 2.3 percent.
Investors mulled over China's first revelation of its gold reserves since 2009. The People's Bank of China Friday said gold reserves in the country reached a record 1,658 tons as of June, 2015, up a near 60 percent from 1,054 tons in April 2009. However, the surge was below analysts' expectations, dragging gold prices down sharply.
In a slew of upbeat economic news, U.S. consumer prices rose in line with estimates in June, partly reflecting another notable increase in energy prices. In another upbeat sign for the housing market, a Commerce Department report on Friday showed significant increases in both housing starts and building permits in June.
Nevertheless, a report from the University of Michigan on Friday said consumer sentiment in the U.S. pulled back in July, after having reported a substantial improvement in in the previous month.
Gold for August delivery, the most actively traded contract, dropped $12.00 or 1.1 percent, to settle at $1,131.90 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.
Gold for August delivery scaled an intraday high of $1,144.50 and a low of $1,129.60 an ounce.
On Thursday, gold prices dropped $3.50 or 0.3 percent, to settle at $1,143.90 an ounce, as investors mulled over the possibilities of a rate hike with a slew of upbeat economic data from the U.S. and remarks by the Fed Chief Janet Yellen pointing to an imminent hike this year.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 707.88 tons on Friday from its previous close of 709.07 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.87 on Friday, up from its previous close of 97.66 in late North American trade on Thursday. The dollar scaled a high of 97.91 intraday and a low of 97.42.
The euro trended lower against the dollar at $1.0851 on Friday, as compared to its previous close of $1.0875 in North American trade late Thursday. The euro scaled a high of $1.0908 intraday and a low of $1.0842.
On the economic front, a Labor Department report on Friday showed U.S. consumer price index climbed by 0.3 percent in June following a 0.4 percent increase in May, in line with economists' estimates.
In another upbeat sign for the housing market, a Commerce Department report on Friday showed housing starts to have jumped 9.8 percent to an annual rate of 1.174 million in June from the revised May estimate of 1.069 million. Economists expected housing starts to climb to a rate of 1.125 million from the 1.036 million originally reported for the previous month.
Building permits, an indicator of future housing demand, surged 7.4 percent to an annual rate of 1.343 million in June from the revised May rate of 1.125 million. Economists expected building permits to rise to an annual rate of 1.178 million from the 1.275 million originally reported for the previous month.
A report from the University of Michigan on Friday showed consumer sentiment in the U.S. to have pulled back in July, after reporting a substantial improvement in in the previous month. A preliminary reading on the consumer sentiment index for July came in at 93.3, down from the final June reading of 96.1. Economists expected the index to edge down to 96.0.
Eurozone construction output increased in May after falling in the previous month, figures from Eurostat showed Friday. Construction output climbed 0.3 percent month-over-month in May, reversing a 0.2 percent decrease in April, which was revised from a 0.3 percent hike reported earlier.
The leading economic index in the UK, which measures the future economic activity, decreased in May, results of a survey by the Conference Board showed Thursday. The Conference Board leading economic index fell 0.4 percent in May, following a 0.3 percent climb in April.