News Column

Gold Ends Lower On Global Cues

August 8, 2014

WASHINGTON (Alliance News) - Gold futures snapped a two-day gain to end lower on Friday, after trading higher for much of the day on news that President Barack Obama authorized a limited airstrike on militants in Iraq. Investors tracked rising US equity markets after some mixed economic data with US wholesale inventories rising less than expected in June.

Global equity markets ended mostly in the red yesterday, on developments over Ukraine with Russia taking an aggressive stand, banning the import of agricultural produce from the US and the EU. The US and the EU had imposed additional sanctions on Russia for its alleged involvement in supporting separatists in eastern Ukraine.

Gold futures had been trading higher amid reluctance by major central banks to signal their next moves. In the US, the Federal Reserve provided no clarity as to when it would begin tightening rates, while in Europe the European Central Bank this week resisted calls to offer further stimulus to aid the region's ailing economy.

Nonetheless, investors continued to seek the save haven of the yellow metal amid concerns over the situation in Iraq and Ukraine.

On Thursday, in a bid to thwart the advancing Islamic militants, the US President Barack Obama authorized airstrikes in Iraq.

In economic news, wholesale inventories in the US rose by less than expected in June, even as wholesale sales indicated only a modest increase, a report from the Commerce Department showed Friday. Meanwhile, labor productivity in the US increased more than anticipated in the second quarter, with the jump in contributing to a smaller than expected increase in labor costs.

Chinese exports rose notably more than expected in July on strong foreign demand but weak domestic consumption dragged imports, taking the trade surplus to a record high.

Gold for December delivery, the most actively traded contract, dipped USD1.50 or 0.1% to close at USD1,311.00 an ounce on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of USD1,324.30 and a low of USD1,305.70 an ounce.

On Thursday, gold futures ended higher as investors sought the safe haven of the precious metal while staying away from risky equity assets as most global markets ended in the red on developments over Ukraine.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 797.65 tons on Friday from its previous close of 800.05 tons.

The dollar index, which tracks the US unit against six major currencies, traded at 81.36 on Friday, down from its previous close of 81.43 late Thursday in North American trade. The dollar scaled a high of 81.60 intraday and a low of 81.26.

The euro traded higher against the dollar at USD1.3415 on Thursday, as compared to its previous close of USD1.3364 late Thursday in North American trade. The euro scaled a high of USD1.3432 intraday and a low of USD1.3344.

In economic news from the US, labor productivity rose by a more than anticipated 2.5% in the second quarter, data released by the Labor Department showed. Economists had expected an increase of 1.5%.

Unit labor costs were up 0.6% in the second quarter, notably lower than expectations for a 1.4% growth.

Wholesale inventories in the US climbed by 0.3% in June, matching the downwardly revised increase seen in May. Economists had been expecting inventories to increase by about 0.6% compared to the 0.5% growth originally reported for the previous month.

The weaker than expected growth came as a 0.7% increase in inventories of durable goods was partly offset by a 0.2% drop in inventories of non-durable goods.

Wholesale sales in the US inched up by just 0.2% in June following a 0.7% increase in May.

China's exports grew 14.5% year-on-year in July, more than double the 7.2% increase seen in June, the General Administration of Custom showed Friday. Shipments were expected to increase 7%. Meanwhile, imports declined 1.6%, reversing the 5.5% increase in June and confounded expectations for a 2.6% rise.

The Bank of Japan unanimously decided to maintain status quo position with respect to its monetary policy, the central bank stated on Friday after its two-day monetary policy meet. The central bank said it will continue to increase the monetary base at an annual pace of about JPY 60 trillion to JPY 70 trillion.

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Source: Alliance News

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