Gold futures settled sharply higher Thursday, tracking declining global equity markets with the dollar turning weak against some major currencies after the U.S. Federal Reserve Chairman Ben Bernanke yesterday indicated the central bank would likely cut down its quantitative easing program in the near future.
Investors largely ignored a slew of positive macroeconomic data out of the U.S., even as China's manufacturing sector contracted for the first time in seven months in May. The drop comes amid poor demand, fueling concerns of weakness in the economy that may persist for some more time.
Gold for June delivery, the most actively traded contract, surged $24.40 or 1.8 percent to close at $1,391.80 an ounce Thursday on the Comex division of the New York Mercantile Exchange.
Gold for June delivery scaled an intraday high of $1,397.10 and a low of $1,355.00 an ounce.
Yesterday, gold settled lower after the U.S. Federal Reserve Chairman Ben Bernanke's testimony before the Congress that the central bank would likely go slow on its quantitative easing program soon. The Fed chief generated some negative sentiment in his testimony before the Congress when he indicated that upbeat economic data could lead the central bank to scale back its asset purchase program in the next few meetings.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 1,020.07 tons from 1,023.08 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.72 on Thursday, down from 84.28 late Wednesday in North American trade. The dollar scaled a high of 84.50 intraday and a low of 83.60.
The euro traded higher against the dollar at $1.2941 on Thursday, as compared to $1.2859 late Wednesday in North America. The euro scaled a high of $1.2955 intraday and a low of $1.2822.
In economic news from the U.S., the Labor Department said that initial jobless claims fell to 340,000 in the weekended May 18, a decrease of 23,000 from the previous week's revised figure of 363,000. Economists had expected jobless claims to drop to about 345,000 from the 360,000 originally reported for the previous week.
Separately, the Commerce Department said that new home sales climbed 2.3 percent to a seasonally adjusted annual rate of 454,000 in April from the revised March rate of 444,000. Economists had expected new home sales to rise to an annual rate of 425,000 compared to the 417,000 originally reported for the previous month, reflecting a 1.9 percent increase.
China's manufacturing sector contracted in May, with the headline purchasing managers' index, an indicator of the health of the factory sector, dropping to a seven-month low of 49.6 from 50.4 in April. Readings below 50 indicate contraction of the sector. Economists expected the index to remain unchanged from March's level.
Elsewhere, Germany's private sector activity improved from a five-month low, but remained marginally below the neutral level, flash survey results from Markit Economics showed. The composite output index rose to 49.9 in May from a five-month low of 49.2 in April. A reading below 50 suggests contraction.
Consumer sentiment in the euro area increased for the sixth consecutive month in May to its strongest level since the middle of last year, preliminary data from the European Commission showed Thursday. The DG ECFIN flash estimate of the consumer confidence came in at -21.9, up from April's final score of -22.3. Economists expected a score of -21.8 for May. The confidence indicator for the EU also improved in May, rising to -20.2 from -20.4.
Meanwhile, eurozone private sector activity continued to decline in May, but at a slower pace than in the previous month, flash results of a survey by Markit Economics showed. The composite output index, that measures performance of the both manufacturing and service sectors, rose to 47.7 in May from 46.9 in April. Economists expected the reading to rise to 47.2.
The U.K. economy avoided recession in the first quarter as initially estimated, second estimates from the Office for National Statistics showed. Gross domestic product grew 0.3 percent sequentially in the first quarter, offsetting the last quarter's 0.3 percent fall.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.