Gold Ends Lower On Data, Shutdown

Gold futures ended modestly lower on Thursday, after ending sharply higher yesterday. Gold prices reacted after some data out of the U.S. showed initial jobless claims for unemployment benefits rose less than expected in last week, even as activity in the service sector dropped more than anticipated. Meanwhile, the partial shutdown of the U.S. government entered a third day with lawmakers failing to reach a consensus on the budget. Nonetheless, some less than encouraging macroeconomic data, prolonged budget talks, and fears of a bigger showdown over raising the debt ceiling stoked expectations that the Federal Reserve will go slow on tapering.
Elsewhere, China relaxed its gold trading norms by increasing the number of companies approved to import and export the yellow metal. Overseas trading in the metal is currently restricted to just nine major banks. Gold for December delivery, the most actively traded contract, dropped $3.10 or 0.2 percent to close at $1,317.60 an ounce Thursday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery scaled an intraday high of $1,322.80 and a low of $1,302.00 an ounce. Yesterday, gold bounced back to end sharply higher, with investors seeking the safe haven appeal of the precious metal with the U.S. Government partially shutdown. Gold plunged over three percent yesterday on a sell-off with investors mulling the shutdown impact on demand for the precious metal.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved down to 901.79 tons from 905.99 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.75 on Thursday, down from 79.92 late Wednesday in North American trade. The dollar scaled a high of 79.92 intraday and a low of 79.63.
The euro traded higher against the dollar at $1.3620 on Thursday, as compared to its previous close of $1.3578 late Wednesday in North America. The euro scaled a high of $1.3646 intraday and a low of $1.3578.
In economic news from the U.S., the Labor Department said initial jobless claims inched up to 308,000, an increase of 1,000 from the previous week’s revised figure of 307,000. Economists had been expecting initial jobless claims to climb to 315,000 from the 305,000 originally reported for the previous week.
Separately, the Institute for Supply Management said its non-manufacturing index dropped to 54.4 in September from 58.6 in August. While a reading above 50 indicates continued growth in the service sector, economists had expected the index to show a much more modest decrease to a reading of 57.0.
From the eurozone, Germany’s service sector activity increased at the fastest pace in seven months in September, but to a lesser extent than estimated earlier, final data from a survey by Markit Economics and BME showed. The seasonally adjusted purchasing managers’ index for the service sector advanced to 53.7 in September from 52.8 in August, hitting the highest level since February. Initially, the index for September was estimated to have risen to 54.4.
Meanwhile, private sector business activity across the eurozone improved slightly more than previously estimated in September, final results of a survey by Markit Economics revealed. The composite output index, that measures performance of both manufacturing and service sectors, rose to a 27-month high of 52.2 in September from 51.5 in August. The flash estimate was 52.1.
Eurozone retail sales increased more than expected in August, latest figures from Eurostat revealed. Retail sales increased 0.7 percent month-on-month in August compared with forecast for a 0.2 percent growth. This followed a 0.5 percent rise in July and a 0.8 percent decline in June.
Source: RTT Staff Writer
Source:Bullion Bulletin

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