Gold settles at its lowest level since early July

Prices pressured by upbeat data and strong dollar

Bullion metals ended lower on Wednesday, 27 November 2013 at Comex. Gold futures on Wednesday settled at their lowest level since early July, pressured by strength in the dollar as traders mulled the metal's appeal against a backdrop of rising U.S. consumer sentiment as well as declines in durable-goods orders and a Chicago's business gauge. The key outside markets turned bearish for the precious metals as the trading session progressed.

Gold for February delivery shed $3.60, or 0.3%, to settle at $1,237.90 an ounce on the Comex division of the New York Mercantile Exchange after touching intraday highs above $1,250.

On Comex, March silver fell 21 cents, or 1.1%, to $19.68 an ounce.

The U.S. dollar was lifted by some upbeat U.S. economic data, while crude oil sold off on a bearish weekly U.S. energy stocks report.

While it was a somewhat quieter market place Wednesday, in a pre-holiday trading atmosphere (the U.S. Thanksgiving holiday is on Thursday) it was a very busy day for U.S. economic data. The data was a mixed bag, but tilted toward the upbeat side, and that gave the greenback a lift. When the dollar index moved higher, gold prices started to lose altitude.

This morning was busy in terms of economic data. Weekly initial claims were better than expected, declining 10,000 to 316,000 (consensus 330,000). In turn, continuing claims also beat estimates, dropping by 91,000 to 2.776 million (Briefing.com consensus 2.875 million). Seasonal adjustment problems were cited as a factor for the low level of initial claims, so once again we'll have to put an asterisk next to a number that looks encouraging at first blush. In all likelihood, the initial claims level will move higher as the seasonal adjustment problem gets corrected.

Separately, the durable orders headlines weren't all that encouraging. Total orders declined 2.0% in October (consensus -2.2%) from an upwardly revised 4.1% increase in September (from 3.8%). Excluding transportation, orders declined 0.1% (consensus 0.2%) from an upwardly revised 0.2% increase in September (from -0.1%). The upward revisions to September's data cushioned some of the blow of the downturn in October. The report though was still disappointing in terms of what it said about business investment, which is that it is weak.

Manufacturing activity in the Chicago region remained strong. The Chicago PMI fell to 63.0 in November from 65.9 in October. That was the first time since November/December 2011 that the index stayed above 60 for two consecutive months. The consensus expected the Chicago PMI to fall to 58.0.

Lastly, the final reading of the November Michigan Consumer Sentiment Survey was revised up to 75.1 from 72.0 (consensus 73.0) while October Leading Indicators ticked up 0.2% (consensus -0.1%).

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