Gold futures snapped 10 days of straight losses to end higher on Thursday, as the dollar weakened against some major currencies with bargain hunters swooping in after the precious metal’s the longest losing streak in two decades.
Nonetheless, the gains were limited on the prospect of a rate hike from the Federal Reserve and already low inflation diminishing the appeal of the precious metal, as well as on some upbeat economic data from the U.S. In an upbeat sign for the job market, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have tumbled to its lowest level in over forty years for the week ended July 18.
Meanwhile, a Conference Board report on Thursday showed a bigger than expected increase in its index of leading U.S. economic indicators, pointing to continued strength in the economic outlook for the remainder of the year. Gold’s safe haven appeal have been diminishing over the last several weeks after global uncertainties eased considerably, with the Greek financial imbroglio finding a temporary reprieve, Iran striking a deal with the West, and signs of global economic recovery.
Gold for August delivery, the most actively traded contract, gained $2.60 or 0.2 percent, to settle at $1,094.10 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday. Gold for August delivery scaled an intraday high of $1,104.90 and a low of $1,091.60 an ounce.
On Wednesday, gold prices fell $12.00 or 1.1 percent, to settle at $1,091.50 an ounce, down for a tenth straight session as the dollar strengthened and with investors convinced the Federal Reserve will finally raise interest rates by the year end, diminishing gold’s appeal as a hedge against inflation.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, edged down to 687.31 tons on Thursday from its previous close of 689.69 tons on Wednesday.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.10 on Thursday, down from its previous close of 97.45 in late North American trade on Wednesday. The dollar scaled a high of 97.51 intraday and a low of 96.89.
The euro trended higher against the dollar at $1.1006 on Thursday, as compared to its previous close of $1.0929 in North American trade late Wednesday. The euro scaled a high of $1.1019 intraday and a low of $1.0922.
On the economic front, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have dropped to 255,000, a decrease of 26,000 from the previous week’s unrevised level of 281,000. Economists expected jobless claims to edge down to 279,000. With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 233,000 in November of 1973.
Pointing to continued strength in the economic outlook for the remainder of the year, a Conference Board report on Thursday showed a bigger than expected increase in its index of leading U.S. economic indicators. The Board’s leading economic index climbed 0.6 percent in June following an upwardly revised 0.8 percent increase in May. Economists expected the index to edge up by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.
U.K. retail sales declined unexpectedly in June, reflecting weak food and non-food store turnover, weighing marginally on the second quarter economic growth. Retail sales including automotive fuel declined 0.2 percent in June from the prior month, reversing a 0.3 percent rise in May, data from the Office for National Statistics showed Thursday. Sales were expected to grow 0.4 percent. This was the first drop in three months.
Japan posted a merchandise trade deficit of 69.045 billion yen in June, the Ministry of Finance said on Thursday. That missed forecast for a surplus of 45.8 billion following the downwardly revised 217.2 billion yen deficit in May.