Bullion end higher by 0.4%

Gold marks highest close in more than three months

Bullion prices ended 0.4% higher on Thursday, 13 February 2014. Gold futures topped $1,300 an ounce on Thursday, marking the highest close in more than three months as a bigger-than-expected fall in January U.S. retail sales and a rise in weekly jobless claims helped fuel weakness in the dollar and lured investors to the perceived safety of the precious metal.

Gold for April delivery tacked on $5.10, or 0.4%, to settle at $1,300.10 an ounce on the Comex division of the New York Mercantile Exchange after a high of $1,301.60.

March silver added 5 cents, or 0.3%, to $20.395 an ounce following eight-straight session of gains.

U.S. economic data released Thursday favored the weaker side of expectationsespecially a downbeat retail sales report, and that also was a positive for the precious metals markets. Recent weaker U.S. economic data bolsters notions the Fed will be constrained in its efforts to taper its monthly bond buying (called quantitative easing). The specter of tapering has been a bearish underlying factor for the raw commodity sector the past few months.

Retail sales fell 0.4% in January after declining a downwardly revised 0.1% (from +0.2%) in December. The consensus expected no growth in January. The report was discouraging and many are going to point to extreme winter weather conditions as the primary cause for the larger-than-expected decline. That scenario holds some truth as sectors that are normally affected by weather conditions such as motor vehicle sales (-2.1%) and restaurants (-0.6%) saw significant pullbacks. However, spending in general was weaker across the board. That could signal that the spending out of savings that occurred in December was a one-time event related to the holidays and not the start of a new trend.

The weekly initial claims level increased to 339,000 from an unrevised 331,000 while the consensus expected an increase to 335,000. Business inventories increased 0.5% in December after increasing 0.4% in November while the consensus expected an increase of 0.4%. Total inventories consist of manufacturers, merchant wholesalers, and retails. Both manufacturers (0.5%) and wholesaler (0.3%) inventories were announced prior to the total inventory release. The only unknown was retailer inventories, which increased 0.6% in December after increasing 0.8% in November.

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