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Gold Ends Lower On Upbeat Data, Strong Dollar; Down 5% For Month


Gold futures ended lower for a second straight day Thursday, with the precious metal losing its investment shine on some upbeat macroeconomic data out of the U.S. Investors were on a profit taking spree with the U.S. dollar and equity markets rising, notwithstanding concerns over the eurozone and the sequestration debate.

Meanwhile, India held its gold import duty unchanged in today's Federal Budget, defying industry expectations for an increase in rates to curb demand and rein in a record current account deficit.

In economic news, U.S. GDP for the fourth quarter grew, albeit lesser than anticipated, while initial jobless claims dropped more than expected last week. A key Institute for Supply Management - Chicago report showed business activity in the area to have increased more than expected to its highest level in more than a year.

Gold for April delivery, the most actively traded contract, dropped $17.60 or 1.1 percent to close at $1,578.10 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold prices dropped for a fifth monthly decline, dropping 5% in February.

Gold for April delivery scaled an intraday high of $1,602.50 and a low of $1,574.30 an ounce.

Yesterday, gold settled sharply lower after some upbeat global macroeconomic data out of the U.S. and Europe, and on developments in Italy. Political parities in Italy have begun exploring possibilities of forming a government after initial rhetoric from various groups to the contrary.

The euro traded lower against the dollar at $1.3083 on Thursday, as compared to $1.3136 late Wednesday in North America. The euro scaled a high of $1.3161 intraday and a low of $1.3058.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.85 on Thursday, up from 81.57 late Wednesday in North American trade. The dollar scaled a high of 81.92 intraday and a low of 81.47.

In economic news, a U.S. Commerce Department report on Thursday showed the country's GDP increased at an annual rate of 0.1 percent in the fourth quarter compared to the 0.1 percent drop that was originally reported. Economists had been expecting a more substantial upward revision, with the consensus estimate for the revised report to show 0.5 percent growth.

Separately, the U.S. Labor Department said initial jobless claims dropped to 344,000, a decrease of 22,000 from the previous week's revised figure of 366,000. Economists expected jobless claims to edge down to 360,000 from the 362,000 originally reported for the previous week.

Chicago-area business activity unexpectedly increased at a faster rate in February, a report from the Institute for Supply Management - Chicago showed Thursday. The business barometer, at its highest in almost a year, rose to 56.8 in February from 55.6 in January, with a reading above 50 indicating an increase in business activity. Economists expected the barometer to edge down to 55.0.

Elsewhere, inflation in the euro area, as per the harmonized index of consumer prices, weakened in January as estimated earlier, final data from statistical office Eurostat showed. The harmonized index of consumer prices (HICP), measured under the EU methodology, increased 2 percent on an annual basis in January, after rising 2.2 percent in December. The latest figure matched preliminary estimates.

German unemployment declined unexpectedly by 3,000 in February from the prior month, the Federal Labor Agency said. However, the jobless rate held steady at 6.9 percent in February, above the consensus forecast to 6.8 percent.

Germany's EU harmonized inflation slowed less than economists expected in February, latest data showed. Inflation as per the harmonized index of consumer prices dropped to 1.8 percent in February from 1.9 percent in January, preliminary data from the Federal Statistical Office showed. Economists had forecast a faster deceleration to 1.7 percent.

by RTTNews Staff Writer

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