Gold futures ended higher Wednesday on continued hopes of monetary stimulus and some positive productivity data from the U.S. While the dollar strengthened, the euro continued to struggle after some weak economic data out of Germany, which also triggered hopes of further quantitative easing to push economic growth and prop up the eurozone.
Gold for December delivery, the most actively traded contract, dropped $3.20 or 0.2 percent to close at $1,616.00 an ounce Wednesday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery traded at an intraday high of $1,619.50 and a low of $1,605.90 an ounce.
Gold ended lower yesterday, after fluctuating for much of the day, mostly on selling pressure with a weak dollar.
The euro traded lower against the dollar at $1.2357 on Wednesday, as compared to $1.2399 late Tuesday in North America. The euro scaled a high of $1.2402 intraday and a low of $1.2328.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.36 on Wednesday, up from from 82.32 in North American trade late Tuesday. The dollar scaled a high of 82.53 intraday and a low of 82.26.
In economic news, labor productivity in the U.S. rose more than expected in the second quarter, a report by the Labor Department showed Wednesday. Nonetheless, the report also indicated a sharper than expected jump in labor costs.
Productivity in the second quarter increased by 1.6 percent following a revised 0.5 percent drop in the first quarter. Economists expected productivity to increase by about 1.3 percent compared to the 0.9 percent decrease originally reported for the previous quarter.
In economic news from the eurozone, the Bank of England lowered growth estimate for the U.K. as fiscal consolidation and euro zone debt crisis weigh on demand. In its quarterly Inflation Report, the BoE said economic growth is likely to be around 2 percent in two years, down from the 2.6 percent expansion estimated in May.
Meanwhile, German trade surplus unexpectedly increased in June as imports declined at a pace double than that of exports, indicating that the sovereign debt crisis and the economic slowdown has dampened both domestic and foreign demand. Exports fell 1.5 percent month-on-month on a calendar-and-seasonally adjusted basis, the Federal Statistical Office showed Wednesday. This was faster than economists' forecast for a 1.3 percent drop.
Germany's industrial production decreased more-than-expected in June, adding to fears that the economy may have contracted in the second quarter, preliminary data showed Wednesday. Overall industrial production fell a calendar-and-seasonally adjusted 0.9 percent from May, the Ministry of Economics and Technology said. Economists anticipated a decline of 0.8 percent.
Nonetheless, Fitch Ratings affirmed Germany's triple-A credit rating on Wednesday with stable outlook, citing the longstanding credit strengths and robust economic performance of the country over the past two years.
by RTT Staff Writer
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