Gold Ends Sharply Lower As Dollar Strengthens

(RTTNews) - Gold futures plummeted to end lower for a sixth straight session Wednesday, tracking rising equity markets with the dollar continuing to strengthen against a select band of currencies on the diverging interest rate outlooks for the U.S. and Europe. The precious metal was also impacted after some mixed economic data from the U.S. with private sector jobs increasing more than expected in October while activity in the service sector grew at a slower pace.

In some upbeat economic news from the U.S., private sector employment increased more than anticipated in October, a report from payroll processor ADP showed Wednesday.

However, activity in the U.S. service sector grew at a slower rate in October, a report from the Institute for Supply Management showed Wednesday, with the index of activity in the sector falling more than anticipated. Meanwhile, a report from Markit Economics also showed China's services sector growth to have slowed in October.

Gold for December delivery, the most actively traded contract, plunged $22.00 or 1.9 percent to settle at $1,145.70 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1,169.30 and a low of $1,137.10 an ounce. It was the lowest level since April 2010.

On Monday, gold futures ended lower amid rising speculation about U.S. interest rate hikes and subdued physical demand. The precious metal was also impacted after the European Commission lowered its euro area growth forecasts, citing weak economy and slow improvement in the employment situation.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged lower to 738.81 tons on Wednesday from its previous close of 741.21 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.39 on Wednesday, up from its previous close of 87.00 late Tuesday in North American trade. The dollar scaled a high of 87.61 intraday and a low of 86.94.

The euro trended higher against the dollar at $1.2483 on Wednesday, as compared to its previous close of $1.2546 late Tuesday in North American trade. The euro scaled a high of $1.2567 intraday and a low of $1.2458.

In economic news, data released by payroll processor ADP showed U.S. private sector to have added more than anticipated 230,000 jobs in October, following an upwardly revised increase of 225,000 jobs in September. Economists expected an addition of about 220,000 jobs compared to the addition of 213,000 jobs originally reported for the previous month.

According to a report from the Institute for Supply Management, activity in the U.S. service sector grew at a slower rate in the month of October. The ISM's non-manufacturing index dropped to 57.1 in October from 58.6 in the preceding month.

In economic news from Asia, a report from Markit Economics showed China's services sector growth to have slowed in October, with the HSBC services business activity index falling to 52.9 in the month, from 53.5 in September.

Japan's service sector contracted for the fifth time since the sales tax was raised in April, a survey showed Wednesday. The headline services Purchasing Managers' Index dropped to 48.7 in October from 52.5 in September, marking the fastest fall since April. The decline in activity was partly the result of poor weather.

Eurozone retail sales declined more than expected in September on a notable decrease in non-food product sales, data revealed Wednesday. Retail sales fell 1.3 percent in September from last month reversing a 0.9 percent rise in August, Eurostat said. Sales were expected to fall moderately by 0.8 percent.

U.K. service sector growth slowed more than expected to a seventeen-month low in October, a survey report showed Wednesday. The Markit/CIPS services purchasing managers' index dropped to 56.2 in October from 58.7 in September, less than the 58.5 score expected by economists.