Gold Settles Lower As Dollar Strengthens

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Gold futures snapped nine days of straight gains to end lower on Wednesday, ahead of the Federal Reserve’s minutes of its January meet later in the day, with the dollar trending higher against a basket of some select currencies. Nonetheless, gold made up for some of the losses after some disappointing housing starts and building permits data from the U.S. On the economic front, the pace of new home building projects in the U.S. fell sharply in January, a new government report showed on Wednesday. Severe winter weather may have impacted the statistics. Building permits, a measure of future building activity, also dropped during the month, though the fall was far less steep.
Meanwhile, wholesale inflation in the U.S. picked up slightly in January, new government statistics showed Wednesday, in line with expectations and well within a range that indicates that inflation pressures remain under control. The report included a new computing structure, with attempts to paint a broader picture of how prices are moving in the economy. Gold for April delivery, the most actively traded contract, dropped $4.00 or 0.3 percent to close at $1,320.40 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Gold for April delivery scaled an intraday high of $1,323.00 and a low of $1,314.20 an ounce. Yesterday, gold ended higher after some data showed soft manufacturing activity in the New York area, with the dollar trending lower against some major currencies. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged at 801.25 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.11 on Wednesday, up from its previous close of 80.00 late Tuesday in North American trade. The dollar scaled a high of 80.11 intraday and a low of 79.93. The euro traded lower against the dollar at $1.3749 on Wednesday, as compared to its previous close of $1.3759 late Tuesday in North America. The euro scaled a high of $1.3773 intraday and a low of $1.3740. In economic news from the U.S., the Commerce Department said housing starts dropped 16 percent to an annual rate of 880,000. This included a 15.9 percent drop in new construction on single-family homes. Economists expected a drop, but at about 950,000 homes. The housing starts figure is 2 percent below the pace seen in January of 2013. The stats for December was revised upward to 1.048 million homes, compared to the rate of 999,000 originally reported.
Building permits, a measure of future building activity, also dropped during January, though the fall was far less steep. The figure fell 5.4 percent in January to a pace of 937,000.
Meanwhile, a Labor Department report showed wholesale inflation in the U.S. advanced 0.2 percent in January compared to the previous month, at a slightly faster pace than was seen in December, when it rose 0.1 percent. Economists expected the wholesale inflation to rise by 0.2 percent.
Producer prices in the U.S. advanced 0.2 percent in January compared to the previous month. Producer prices were up 1.2 percent compared with last year, a slight pick up from the previous month’s pace of 1.1 percent. From Europe, unemployment rate in U.K. rose unexpectedly in December, arresting the continuous decline seen since early last year that took the rate close to the Bank of England’s 7 percent threshold. The ILO unemployment rate climbed to 7.2 percent in the December quarter from 7.1 percent in the three months to November. The increase was the first since February last year, when it was 7.9 percent. Economists expected the rate to remain unchanged at 7.1 percent in the fourth quarter.
Source: RTT Staff Writer
Source:Bullion Bulletin

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