Bullion prices extended gains for a third session on Wednesday

Weak economic data send gold to a nearly five-week high

Bullion prices extended gains for a third session on Wednesday, 15 October 2014 after weak U.S. economic data hammered stocks and sent investors toward safety plays. Three major U.S. economic reports on Wednesday morning were all softer than forecast, sending gold to a nearly five-week high as equities, the U.S. dollar and Treasury yields sagged.

Gold for December delivery climbed $10.50, or 0.9%, to $1,244.80 an ounce at Comex. Before the soft data, the contract had been showing a decline.

December silver rose 6 cents, or 0.4%, to $17.46 an ounce.

U.S. stocks sold off amid the largest volume in nearly three years, as investors jettisoned risky securities and scrambled for the safety of government bonds as 10-year Treasurys surged and yields briefly dipped below 2%, until settling at a 52-week low. The financial sector led the rout in U.S. stocks on Wednesday, as investors grew concerned about a range of issues from the economy to inflation to the current Ebola outbreak.

Economic data at Wall Street included Retail Sales, PPI, Empire Manufacturing, Business Inventories, and the MBA Mortgage Index. Retail sales declined 0.3% in September following an unrevised 0.6% gain in August, while the consensus expected a downtick of 0.2%. Motor vehicle sales declined 0.8% after increasing 1.9% in July, which was in-line with the decline in per unit sales reported by the motor vehicle manufacturers. Excluding autos, retail sales declined 0.2% in September after increasing an unrevised 0.3% in August, while the consensus expected an increase of 0.3%.

Producer prices fell 0.1% in September after reporting no change in August, while the consensus expected an increase of 0.1%. As expected, energy prices fell 0.7% in September, which was the third consecutive monthly decline. Food prices fell for the second consecutive month and the fourth time in the last five months, dropping 0.7% after falling 0.5% in August. Excluding food and energy, core PPI was flat after increasing 0.1% in August, while the consensus expected an increase of 0.1%.

The Empire Manufacturing Survey for October fell to 6.2 from 27.5, while the consensus expected a downtick to 20.4. Also, Business inventories increased 0.2% in August after increasing an unrevised 0.4% in July, while the consensus expected an increase of 0.4%. The weekly MBA Mortgage Index rose 5.6% to follow last week's 3.8% increase.

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