Gold futures snapped a five-day loss to end sharply higher Thursday, after Federal Reserve chairwoman-designate Janet Yellen said the U.S. central bank is in no hurry to taper down its quantitative easing program, even as some soft economic data filtered in. Gold is generally considered a safe haven and a store of wealth, which does well with inflation and currency concerns. Any talk of quantitative easing tends to push gold prices higher, and is a hedge against inflation and benefits with currency debasement.
Janet Yellen, President Obama’s choice to lead the Federal Reserve when Chairman Ben Bernanke steps down in January, facing Senate confirmation hearing Thursday morning, said unemployment remains too high for the Fed to consider any significant scale down to its $85 billion monthly bond-buying program. Yellen, currently Vice Chairman of the central bank, defended the ultra-easy monetary policy that has seen the Fed’s balance sheet more than quadruple to nearly $4 trillion since 2008.
Another positive for gold was in the form of the World Gold Council forecast that China is all set to become the largest consumer of the precious metal by the end of 2013, considering the restrictions in place for import of gold into India– currently the biggest consumer of gold. Gold for December delivery, the most actively traded contract, surged $17.90 or 1.4 percent to close at $1,286.30 an ounce Thursday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery scaled an intraday high of $1,293.80 and a low of $1,277.30 an ounce. Yesterday, gold extended losses for a fifth straight session on continued concerns over the U.S. Federal Reserve next move on scaling down its quantitative easing program, with speculations it could begin by December.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved down to 865.71 tons from 868.42 tons. The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.02 on Thursday, up from 80.81 late Wednesday in North American trade. The dollar scaled a high of 81.21 intraday and a low of 80.74.
The euro traded lower against the dollar at $1.3455 on Thursday, as compared to its previous close of $1.3486 late Wednesday in North America. The euro scaled a high of $1.3497 intraday and a low of $1.3420. In economic news from the U.S., the Labor Department said initial jobless claims edged down to 339,000, a decrease of 2,000 from the previous week’s revised figure of 341,000. Economists had been expecting jobless claims to fall to 330,000 from the 336,000 originally reported for the previous week.
Separately, the Commerce Department said the nation’s trade deficit widened to $41.8 billion in September from a revised $38.7 billion in August. Economists expected the deficit to widen to $39.1 billion. The wider than expected deficit came as the value of imports jumped 1.2 percent to $230.7 billion, while the value of exports edged down 0.2 percent to $188.9 billion. Labor productivity in the U.S. rose by less than expected in the third quarter, a report from the Labor Department showed Thursday, while indicating a bigger than expected decrease in unit labor costs. The report said productivity increased by 1.9 percent in the third quarter compared to the 1.8 percent growth seen in the second quarter. Economists had expected productivity to jump by about 2.3 percent.
Elsewhere, the eurozone economy managed to expand in the third quarter, flash estimates from Eurostat showed. Gross domestic product was up 0.1 percent, down from the 0.3 percent quarterly growth posted in the preceding three months. This was the second consecutive expansion, in line with economists’ expectations. Meanwhile, the German economy grew 0.3 percent quarter-on-quarter in the third quarter, matching economists’ expectation, official data showed. However, economic growth decelerated from the 0.7 percent expansion seen in the second quarter, Destatis said. The statistical office said positive contributions were made only by domestic demand in the third quarter of 2013 and the balance of exports and imports had a downward effect on GDP growth. U.K. retail sales volume dropped 0.7 percent month-on-month in October due to a notable 1.3 percent fall in non-food store sales, the Office for National Statistics said. The drop in sales volume follows a 0.6 percent rise in September. It was forecast to remain flat in October.
Source:RTT Staff Writer
Source:Bullion Bulletin