News Column

Gold Ends Lower On Strong Dollar, Upbeat Data

July 3, 2014

WASHINGTON (Alliance News) - Gold futures snapped a four-day gain to end lower on Thursday, tracking rising equity markets in the US and Europe with the dollar strengthening against a basket of some select currencies after a slew of mostly upbeat economic data from the US

In some positive economic news, employment in the US rose much more than anticipated in June, with unemployment rate dropping to its lowest level in almost six years, a Labor Department report showed Thursday. Elsewhere, a Commerce Department report showed showed US trade deficit to have narrowed more than expected in May, with value of exports rising and value of imports falling. Meanwhile, the European Central Bank kept its interest rates unchanged after its monthly policy meeting on Thursday, even though the region's economy continues to lag.

Nevertheless, geopolitical concerns over developments in Iraq and Ukraine continued to be a matter of concern, helping the precious metal stem and limit losses to a large extent.

Gold for August delivery, the most actively traded contract, dived USD10.30 or 0.8% to close at USD1,320.60 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for August delivery scaled an intraday high of USD1,329.00 and a low of USD1,309.40 an ounce.

On Wednesday, gold futures ended at its highest in more than three months, extending gains to a fourth successive session. While geopolitical concerns contributed to gold's rise, positive global equity markets limited gains.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 796.39 tons on Thursday, from its previous close of 796.93 tons on Wednesday.

The dollar index, which tracks the US unit against six major currencies, traded at 80.21 on Thursday, up from its previous close of 79.94 late Wednesday in North American trade. The dollar scaled a high of 80.32 intraday and a low of 79.95.

The euro traded lower against the dollar at USD1.3609 on Thursday, as compared to its previous close of USD1.3659 late Wednesday in North American trade. The euro scaled a high of USD1.3663 intraday and a low of USD1.3596.

In economic news from the US, a report from the Labor Department showed an addition of 288,000 jobs in June, notably higher than an expected addition of 211,000 jobs. Meanwhile, jobless rate fell to a near six-year low of 6.1%. Economist expected unemployment rate to remain unchanged at 6.3%.

Another report from the Labor Department showed jobless claims to have risen to 315,000 in the week ended June 28th. The consensus estimate called for a rise to 314,000 from 312,000 in the previous week.

A report from the US Commerce Department showed trade deficit to have dropped a more than expected 5.6% in May to USD44.4 billion. Economists expected the trade deficit to have narrowed to USD45.1 billion from USD47.2 billion in the previous month.

Meanwhile, activity in the US service sector grew for the 53rd consecutive month in June a report from the Institute for Supply Management showed Thursday, although the pace of growth slowed slightly with the index edging down to 56.0, from 56.3 in the previous month.

In economic news from the eurozone, the European Central Bank has left its interest rates unchanged at 0.15%, after reducing them in June while announcing several liquidity measures. The bank retained the deposit rate at -0.10%, having slashed the rate from zero to negative in June.

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Source: Alliance News

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