Gold Price Ends Higher As Dollar Weakens
New York (Jan 9) Gold futures ended higher for a second straight session on Tuesday, after the global sell-off yesterday, with the dollar trending lower against some major currencies and investors focused on the Greek financial debt woes with no resolution in the horizon as yet.
The precious metal also enjoyed some safe haven demand amid mounting concerns about the outlook for the global economy. Nonetheless, the gains were modest as traders think the Federal Reserve may be compelled to raise interest rates in September if the U.S. jobs picture continues to brighten.
Meanwhile, Greek Prime Minister Alexis Tsipras readied to brief members of his government on the debt repayment talks with its international creditors, ahead of his meeting with Germany Chancellor Angela Merkel and French President Francois Hollande in Brussels on Wednesday.
Tsipras is on the back-foot after European Union officials reportedly rejected Greece's proposed reforms on budget, tax and debt. The Greek prime minister, however, has offered to raise Value-Added Tax rates and accept higher budget surplus targets.
Gold for August delivery, the most actively traded contract, gained $4.00 or 0.3 percent to settle at $1,177.60 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.
Gold for August delivery scaled an intraday high of $1,182.30 and a low of $1,171.80 an ounce.
On Monday, gold prices gained $5.50 or 0.5 percent to settle at $1,173.60 an ounce, tracking declining global equity markets with the dollar trending lower against a basket of major currencies.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 708.70 tons from its previous close of 709.89 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.15 on Tuesday, down from its previous close of 95.25 on Monday in late North American trade. The dollar scaled a high of 95.58 intraday and a low of 94.85.
The euro trended lower against the dollar at $1.1287 on Tuesday, as compared to its previous close of $1.1292 in North American trade late Monday. The euro scaled a high of $1.1345 intraday and a low of $1.1215.
In economic news, a U.S. Commerce Department report showed wholesale inventories rose 0.4 percent in April compared to the previous month. This is up 4.5 percent compared to April 2014 levels. Economists had expected inventories to rise by 0.2 percent.
Elsewhere, Chinese inflation slowed more than expected in May on easing food price growth, and producer prices extended its decline for the 39th consecutive month, renewing fears of deflationary pressure amid weak demand.
Consumer prices increased 1.2 percent in May from last year, slower than the 1.5 percent growth seen in April, the National Bureau of Statistics said Tuesday. Inflation was expected to ease to 1.3 percent. This was the weakest inflation since January, when prices grew 0.8 percent and was also below the government's full year target of around 3 percent.
The NBS also showed that producer prices declined for 39 straight months. Producer prices dropped 4.6 percent for the third straight month in May. Prices were expected to fall by 4.5 percent.
The eurozone economy grew as initially estimated in the first quarter underpinned by widespread contribution from all sub-components. Gross domestic product expanded 0.4 percent, in line with the estimate published on May 13. The 19-nation currency bloc grew by revised 0.4 percent in the fourth quarter and 0.2 percent in the third quarter of 2014.
On a yearly basis, eurozone economic growth improved to 1 percent from 0.9 percent a quarter ago. The annual growth rate also matched flash estimate.
Germany's labor costs growth quickened in the first quarter of 2015, reaching the highest since first quarter of 2013, data from the Destatis showed Tuesday. Labor costs per hour worked, consisting of gross earnings and non-wage costs, grew a calendar adjusted 3.2 percent year-on-year in the first quarter. This is faster than the revised 2.1 percent rise in the fourth quarter and the highest rate of growth since the first quarter of 2013 when costs rose 3.9 percent.
Germany's manufacturing turnover increased for the first time in three months in April, preliminary figures from Destatis showed Tuesday. Manufacturing turnover rose a seasonally and working-day-adjusted 1.2 percent month-over-month in April, reversing a 0.3 percent fall in March, which was revised from a 1.0 percent decrease estimated earlier.
The U.K. trade deficit narrowed more than expected to a 13-month low in April, the Office for National Statistics showed Tuesday. The visible trade deficit narrowed by GBP 2.1 billion to GBP 8.6 billion in April, the smallest shortfall since March 2014. This was also the largest monthly fall since June 2013. The deficit was forecast to narrow to GBP 9.9 billion.
Japanese consumer sentiment fell unexpectedly in May, survey results from the Cabinet Office showed Tuesday. The consumer confidence index dropped to a seasonally adjusted 41.4 in May from 41.5 in April. It was forecast to rise to 41.9.