Gold settles lower for a third consecutive session

Prices pressured by a higher U.S. dollar index and upbeat U.S. economic data

Bullion prices ended lower on Wednesday, 08 January 2014. Prices were pressured by a higher U.S. dollar index and on fresh, upbeat U.S. economic data. Gold futures settled lower for a third consecutive session on Wednesday as data showing that the private sector in December added the most jobs in more than a year helped buoy the U.S. dollar. Prices for the yellow metal continued to decline in electronic trading following the release of the Federal Reserve's December policy meeting minutes, which came after the official close of gold trading on Comex.

Gold for February delivery fell $4.10, or 0.3%, to settle at $1,225.50 an ounce on the Comex division of the New York Mercantile Exchange.

March silver shed 25 cents, or 1.3%, to $19.54 an ounce.

The gold and silver markets showed no major reactions to Wednesday afternoon's release of the Federal Reserve's FOMC minutes. Gold and silver prices were under pressure before the minutes were released and did weaken just a bit more after the release, as the minutes showed FOMC members were becoming generally more positive on their outlooks for the U.S. economy. The majority of members agreed with the December FOMC decision to begin scaling back (tapering) the quantitative easing of the Fed's monetary policy.

A strengthening U.S. economy suggests the Fed can wind down its massive quantitative easing program that has been in place the past few years. That major monetary stimulus had been a bullish underlying factor for the precious metals the past few years.

The U.S. ADP national employment report, released Wednesday morning, came out a bit hotter than expected. The ADP report added 238,000 jobs in December, which is above the 200,000 rise that was expected.

The U.S. dollar index was boosted following the ADP report and the FOMC minutes, hitting a fresh six-week high on Wednesday. The stronger greenback and lower crude oil prices were bearish outside market forces working against the precious metals markets on this day.

The European Central Bank and Bank of England hold their monthly meetings on Thursday. There is also important economic data coming out of China late this weektrade and inflation figures.

In overnight news, the European Union reported that its retail sales pace in November was the best in a dozen years, at up 1.4% from October and up 1.6% year on year. The consensus forecast was for just a 0.1% rise. German manufacturing orders also rose in November. However, this upbeat data from the Euro zone failed to support the Euro currency against the other majors.

Powered by Capital Market - Live News