Gold Ends Higher On Eurozone Concerns; Sheds 0.6% For Week

October 24, 2014

New York (Oct 24)  Gold futures snapped a two-day loss to end higher Friday, on lingering concerns over the health of the eurozone economy, notwithstanding an unexpected improvement in German consumer sentiment in November. However, for the week, gold prices dropped about 0.6 percent.

Nevertheless, the uptick today was weighed down by strong corporate earnings, with some upbeat economic data from U.S., China and the eurozone, amid a strengthening dollar.

Gold prices were also limited with continued speculation about further stimulus from the European Central Bank and an extended run for the low interest regime in the U.S.

The Federal Reserve is all set to announce its latest monetary policy decision next Wednesday. Despite recent upbeat economic data, it is widely speculated that the Fed may not start hiking interest rates any time soon.

Some recent comments from Fed officials also indicate the central bank may delay the end of its asset purchase program until at least the summer of 2015.

Gold for December delivery, the most actively traded contract, gained 2.70 or 0.2 percent to settle at $1,231.80 an ounce on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of $1,234.70 and a low of $1,228.70 an ounce.

On Thursday, gold futures ended down 16.40 or 1.3 percent at $1,229.10 an ounce, losing for a second straight session, as some upbeat corporate earnings reports and economic data from China and the eurozone prompted traders to go for riskier assets. A stronger greenback also weighed on the yellow metal.

The Conference Board's index of leading U.S. economic indicators rose more than anticipated in September. The U.S. Labor Department's report showed initial jobless claims were up last week, albeit by a less than expected margin.

Meanwhile, concerns persisted over the health of eurozone banking industry with reports from Spanish new agency Efe indicating that eleven banks from six eurozone countries are likely to fail the stress tests, with the results due on Sunday.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 749.87 tons on Friday, from its previous close of 751.96 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.70 on Friday, down from its previous close of 85.83 late Thursday in North American trade. The dollar scaled a high of 85.91 intraday and a low of 85.54.

The euro trended higher against the dollar at $1.2669 on Friday, as compared to its previous close of $1.2647 late Thursday in North American trade. The euro scaled a high of $1.2695 intraday and a low of $1.2636.

On the economic front, a report from the U.S. Commerce Department showed new home sales to have inched up 0.2 percent to an annualized rate of 467,000 in September from the revised August rate of 466,000. Economists expected new home sales to drop to a rate of 460,000 from the 504,000 originally reported for the previous month.

In economic news from eurozone, German consumer confidence index rose slightly to 8.5 in November, up from 8.4 in the preceding month, a report from market research group GfK showed. The score was forecast to fall to 8.

Elsewhere in Europe, the U.K. economy grew at a slower pace in the third quarter in face of rising uncertainty stemming from global economic conditions, preliminary estimates from the Office for National Statistics Office showed Friday. Gross domestic product climbed 0.7 percent from the second quarter, when it grew 0.9 percent. The sequential growth rate was in line economists' expectations.

As expected, GDP was 3 percent higher in the third quarter compared with the same quarter a year ago. GDP was estimated to be 3.4 percent higher than the pre-economic downturn peak of the first quarter of 2008, ONS said.

There are concerns about about the health of eurozone banking industry 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.

Source: RTTnews

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