Gold Ends Lower After U.S. Budget Deal

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Gold futures snapped a two-day gain to end lower on Wednesday, after U.S. lawmakers struck a budget deal to avert a government shutdown next month. The precious metal climbed down from a three-week high with a two-percent surge yesterday, impacted by declining global equity markets and a sharp drop in imports from India, notwithstanding a weak dollar. Investors also weighed the upcoming U.S. Federal Reserve policy meet next week with looming possibilities of a cut to the Fed’s quantitative easing program.
U.S. lawmakers announced details of a bipartisan budget agreement that would fund the government for the next two fiscal years. The deal places spending levels above the $967 billion cap established by the sequester and aims to reduce the deficit by $23 billion without raising taxes. Gold for February delivery, the most actively traded contract, shed $3.90 or 0.3 percent to close at $1,257.20 an ounce Wednesday on the Comex division of the New York Mercantile Exchange.
Gold for February delivery scaled an intraday high of $1,263.20 and a low of $1,252.10 an ounce.
Yesterday, gold rose over 2 percent to settle at a three-week high on a technical rebound, even as most global equity markets ended in the red, largely ignoring some upbeat employment data.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged at 835.71 tons. The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.86 on Wednesday, down from 79.98 late Tuesday in North American trade. The dollar scaled a high of 80.06 intraday and a low of 79.76.
The euro traded higher against the dollar at $1.3795 on Wednesday, as compared to its previous close of $1.3761 late Tuesday in North America. The euro scaled a high of $1.3810 intraday and a low of $1.3742. In economic news from the euro zone, Germany’s EU harmonized inflation increased in November as estimated earlier, final figures released by the Federal Statistical Office showed. Inflation as per the harmonized index of consumer prices rose to 1.6 percent in November from 1.2 percent in October. The November figure matched the preliminary estimates.
Meanwhile, the Asian Development Bank maintained a steady growth estimate for Asia, citing improving outlook in Japan and the United States paired with stronger-than-expected performance in China. The Manila-based ADB has forecast 6 percent growth for 45-member nations and 6.2 percent in 2014. The figures were in line with its estimate published in October.
The GDP outlook for People’s Republic of China was increased by 0.1 percentage points to 7.7 percent in 2013 and 7.5 percent in 2014 on the back of rising infrastructure investment. India is forecast to grow 4.7 percent in fiscal year 2013 on the back of a rebound in exports and higher industrial and agricultural outputs. For 2014, growth in India is seen at 5.7 percent. Both estimates were left unchanged.
According to ADB, South Asia is on track to meet growth expectations of 4.7 percent in 2013 and 5.5 percent in 2014. However, Southeast Asia’s growth was downgraded to 4.8 percent from 4.9 percent this year and to 5.2 percent in 2014 from 5.3 percent.
Source: RTT Staff Writer
Source:Bullion Bulletin

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