Stronger US. dollar and a climb in equities lure investors away
Bullion prices ended lower on Thursday, 30 January 2014. Gold futures dropped on Thursday as a stronger US. dollar and a climb in equities lured investors away. News of a contraction in Chinese factory output in January also contributed to gold's losses.
Gold for April delivery, which is the most-active contract, fell $19.70, or 1.6%, to settle at $1,242.50 an ounce on the New York Mercantile Exchange, giving back the 0.9% gain it scored a day earlier.
March silver lost 43 cents, or 2.2%, to $19.13 an ounce.
World stock and financial markets calmed a bit Thursday amid the recent strains on some non-major world currencies. This took a bit of the luster away from the safe-haven gold market. This week's FOMC meeting is out of the way and the continued $10 billion reduction in monthly bond-buying by the Fed was not unexpected and had little impact on most markets, but is a bullish factor for the U.S. dollar index.
The HSBC China manufacturing final PMI reading for January came in at 49.5 versus 50.5 in December. This latest figure follows the weaker China PMI number posted last week, which is partly attributed to the emerging currencies market turmoil.
In other overnight news, European Union's Economic Sentiment Indicator report came in at 100.9 in January from 100.4 in December. This is the highest ESI reading in 2.5 years. This report continues a trend of upbeat EU economic data that suggests the bloc is on the road to economic recovery, albeit slowly.
The Chinese Lunar New Year holiday has China on holiday for the next week. The world's largest nation and second-largest economy being shut down for several days will likely make for subdued trading action in Asia during the Chinese holiday.
Today's economic data at Wall Street included initial claims, fourth quarter GDP, and the pending home sales report for December. Most notably, GDP increased 3.2% in the fourth quarter, according to the advance estimate. That was down from a 4.1% gain in the third quarter but slightly above the estimate of a 3.0% increase.
Weekly initial claims unexpectedly spiked to 348,000 from an upwardly revised 329,000 (from 326,000) while the consensus expected the claims level to fall to 325,000. Pending home sales for December tumbled 8.7%, which was worse than the 0.2% decrease forecast by the consensus. The reading followed last month's revised decrease of 0.3% (from +0.2%).
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