Gold Price Ends Lower As Dollar Strengthens
Washington (Aug 13) Gold futures snapped a five-day gain to end lower on Thursday, as the dollar trended higher and after Chinese central bank officials defended its move to devalue the yuan spurring a recovery in global equity markets. The precious metal also tracked some upbeat economic data from the US with retail sales rising in July albeit in line with estimates.
Gold has been trending higher in the last couple of days after investors sought the safe haven cover of the precious metal as global equity markets roiled in the aftermath of Beijing's surprise move to devalue its currency. The yuan has lost nearly 3% since China devalued its currency by the most in two decades.
Assistant Governor Zhang Xiaohui of The People's Bank of China at a press conference on Thursday said the Chinese currency has gradually returned to the market level after two days of adjustment and there is no basis for the depreciation to persist. Deputy Governor Yi Gang said when there is excessive volatility in the market, the bank will act.
The market-oriented exchange rate formation mechanism is more conducive to long-term stability, Yi stressed, adding that the flexible exchange rate will increase the central bank's monetary policy independence.
In economic news, US retail sales in July rose in line with estimates, a Commerce Department report revealed Thursday, while business inventories increased much more than expected in June.
Meanwhile, first-time claims for US unemployment benefits increased modestly in the week ended August 8 , a report from the Labor Department showed Thursday. A separate report from the Labor Department showed a notable decrease in US import prices in July, largely reflecting a steep drop in fuel prices.
Gold for December delivery, the most actively traded contract, dropped USD8.00 or 0.7%, to settle at USD1,115.60 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.
Gold for December delivery scaled an intraday high of USD1,126.30 and a low of USD1,112.80 an ounce.
On Wednesday, gold prices for December delivery surged USD15.90 or 1.4%, to settle at USD1,123.60 an ounce, after investors sought the safe haven appeal of the precious metal as global equity markets continued to roil in the aftermath of China's currency devaluation.
Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, moved higher to 671.87 tons on Thursday from its previous close of 667.69 tons.
The dollar index, which tracks the US unit against six major currencies, traded at 96.47 on Thursday, up from its previous close of 96.29 in late North American trade on Wednesday. The dollar scaled a high of 96.81 intraday and a low of 96.12.
The euro trended lower against the dollar at USD1.1142 on Thursday, as compared to its previous close of USD1.1160 in North American trade late Wednesday. The euro scaled a high of USD1.1190 intraday and a low of USD1.1081 .
On the economic front, first-time claims for US unemployment benefits increased modestly in the week ended August 8 , a report from the Labor Department showed Thursday. The initial jobless claims edged up to 274,000, an increase of 5,000 from the previous week's revised level of 269,000. Economists expected jobless claims to come in unchanged compared to the 270,000 originally reported for the previous week.
Retail sales in the US rose 0.6% in July, while revised data showed that sales were unchanged in June. Sales had been expected to climb by 0.6% compared to the 0.3% drop originally reported for the previous month.
Separately, a Commerce Department report on Thursday showed business inventories in the US to have climbed 0.8% in June after rising 0.3% in May. Economists expected another 0.3% increase.
A Labor Department report on Thursday showed US import prices in July to have dropped 0.9% in July after coming in unchanged in June, largely reflecting a steep drop in fuel prices. Economists expected prices to drop about 1.0%.
Policymakers expect Eurozone's economic recovery to broaden further, but to remain moderate and gradual, and risks to the outlook were seen on the downside that included a larger-than-expected adverse impact from the financial developments in China , the minutes of the July rate-setting session of the European Central Bank revealed Thursday.
Source: AllianceNews
