Gold futures ended lower for a sixth straight day on Thursday following a decline in U.S. inflation rate, even as the dollar dropped against some major currencies on a slew of weak macroeconomic data out of the U.S.
A Labor Department report on Thursday showed U.S. consumer price inflation to have dropped more than expected in April, due mainly to a substantial decline in energy prices. Gold normally tends to gain in an inflationary environment and loses out in deflationary conditions.
Among some weak data, first-time claims for U.S. unemployment benefits rose more than anticipated in the week ended May 11, following a recent downward trend. Meanwhile, a Commerce Department report showed U.S. housing starts dropped much more than anticipated in April, although building permits increased substantially.
Manufacturing firms responding to the Federal Reserve Bank of Philadelphia’s monthly Business Outlook Survey indicated an unexpected contraction in regional manufacturing activity in May.
Gold for June delivery, the most actively traded contract, shed $9.30 or 0.7 percent to close at $1,386.90 an ounce Thursday on the Comex division of the New York Mercantile Exchange.Gold for June delivery scaled an intraday high of $1,397.00 and a low of $1,368.00 an ounce.
Yesterday, gold extended losses to settle below the $,1400-mark for the first time in nearly one month after the dollar trended higher against a basket of major currencies and a slew of soft economic data from the U.S. and Europe. The precious metal was also impacted by restrictions on gold imports in India, even as global equity markets continued to push higher.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, moved down to 1,047.13 tons from 1,051.65 tons.
The dollar initially trended higher intraday but slipped following some disappointing data from the U.S. A weaker dollar encourages buying in dollar-priced commodities as it makes them cheaper to holders of other currencies.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.63 on Thursday, down from 83.79 late Wednesday in North American trade. The dollar scaled a high of 84.00 intraday and a low of 83.45.
The euro traded higher against the dollar at $1.2908 on Thursday, as compared to $1.2887 late Wednesday in North America. The euro scaled a high of $1.2930 intraday and a low of $1.2848.
In economic news from the U.S., the Labor Department revealed that initial jobless claims rose to 360,000, an increase of 32,000 from the previous week’s revised figure of 328,000. Economists had expected claims to climb to 330,000 from the 323,000 originally reported for the previous week.
Separately, the U.S. Labor Department said its consumer price index fell by 0.4 percent in April following a 0.2 percent drop in March. Economists had expected prices to decrease by about 0.3 percent. Excluding food and energy prices, the core consumer price index edged up by 0.1 percent in April, matching the increase seen in the previous month. Core prices had been expected to rise by 0.2 percent.
Meanwhile the U.S. Commerce Department said housing starts tumbled 16.5 percent to a seasonally adjusted annual rate of 853,000 in April from the revised March estimate of 1.021 million. Economists expected housing starts to drop to an annual rate of 969,000 from the 1.036 million originally reported for the previous month. On the other hand, the report also showed that building permits jumped 14.3 percent to an annual rate of 1.017 million in April from the revised March rate of 890,000.
Manufacturing firms responding to the Federal Reserve Bank of Philadelphia’s monthly Business Outlook Survey unexpectedly showed regional manufacturing activity has contracted in May.
The Philly Fed report Thursday showed its diffusion index of current activity to have dropped to a negative 5.2 in May from a positive 1.3 in April, with a negative reading indicating a contraction in regional manufacturing activity. Economists expected the index to climb to a positive reading of 2.2.
Elsewhere, eurozone inflation slowed as initially estimated to 1.2 percent in April from 1.7 percent in March, final data from Eurostat showed. Month-on-month, prices were down 0.1 percent. Core inflation that excludes energy, food, alcohol and tobacco, fell to 1 percent from 1.5 percent a month ago.
Separately, the Eurostat said euro zone’s trade surplus more than doubled in March from a month ago. The surplus amounted to EUR 22.9 billion in March, higher than EUR 10.1 billion in February. In March 2012, the balance was positive at EUR 6.9 billion.
by RTT Staff Writer
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