News Column

Gold Ends At Three-Month High On Mixed Economic Data

July 2, 2014

WASHINGTON (Alliance News) - Gold futures made gains for a fourth day to end at a more than three-month high Wednesday, on some mixed economic data from the US and after Fed Chairman Janet Yellen's comments at the International Monetary Fund in Washington, D.C. earlier today.

While geopolitical concerns contributed as well to the precious metal's rise, some positive global equity markets also appear to be limiting the demand for gold to an extent.

Fed Chairman Janet Yellen told the International Monetary Fund in Washington, D.C. Wednesday morning that the primary focus of the Federal Reserve must remain on price stability and maximum employment rather than a stable banking system. She also stressed the importance of regulation and adequate capital requirements which would be more appropriate than monetary policy in curbing excesses within the financial sector.

Private sector employment in the US increased by much more than anticipated in June -- the biggest monthly increase in employment since November of 2012, a report from payroll processor ADP showed Wednesday. Meanwhile, new orders for US manufactured goods fell more than expected in May, due partly to a sharp pullback in orders for transportation equipment, according to a Commerce Department report.

Gold for August delivery, the most actively traded contract, gained USD4.30 or 0.3% to close at USD1,330.90 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. This is highest close since March 21.

Gold for August delivery scaled an intraday high of USD1,333.20 and a low of USD1,322.10 an ounce.

On Tuesday, gold futures ended at a two-month high, with traders opting for the safe haven appeal of the precious metal after some soft data from the US

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to 796.93 tons on Wednesday, from its previous close of 790.70 tons on Tuesday.

The dollar index, which tracks the US unit against six major currencies, traded at 79.96 on Wednesday, up from its previous close of 79.82 late Tuesday in North American trade. The dollar scaled a high of 80.00 intraday and a low of 79.80.

The euro traded lower against the dollar at USD1.3665 on Wednesday, as compared to its previous close of USD1.3679 late Tuesday in North American trade. The euro scaled a high of USD1.3683 intraday and a low of USD1.3644.

On the economic front, a report from ADP showed private-sector hiring in the US to have picked up in June, with employers adding 281,000 jobs. The consensus estimate called for an addition of 213,000 jobs following additions of 179,000 jobs in May. This is the biggest monthly increase in employment since November of 2012.

Meanwhile, data released by the US Commerce Department showed factory orders to have declined by a larger than expected 0.5% in May. Economists expected a 0.3% drop in orders following a 0.7% increase in the previous month.

From Europe, UK house prices expanded at the fastest pace since 2005 in June with sharp annual growth in London, even as measures taken by the government helped bring down overall mortgage approvals. House price growth accelerated further to 11.8% in June, the strongest since January 2005, from 11.1% in May, mortgage lender Nationwide said Wednesday. This exceeded the 11.2% rise forecast by economists.

Producer prices in the euro area declined at a slower pace, with industrial producer prices in the domestic market dropping 1.0% year-on-year in May, slower than April's 1.2% decline. This is in line with economists' expectations.

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Source: Alliance News

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