Gold Rebounds To End Higher

(RTTNews) - Gold futures edged higher on Wednesday, after plummeting over two percent yesterday on inflation concerns in the U.S., fueling speculations of a possible Federal Reserve rate hike in the near term. The developments in Ukraine with tensions mounting as government forces moved in also contributed to the precious metal's rise.

Investors also weighed a likely drop in demand from China due to an economic slowdown, with its gross domestic product growing at an annual rate of 7.4 percent in the first three months of 2014, as compared to the 7.7 percent recorded in the fourth quarter. This is slowest growth of the Chinese economy in about 18 months.

Another setback for gold came in the form of some weak jewelry retail sales from China with a drop of 6 percent in March, recording the first monthly decline in about two years.

Gold for June delivery, the most actively traded contract, gained $3.20 or 0.3 percent to close at $1,303.50 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for April delivery scaled an intraday high of $1,307.10 and a low of $1,293.50 an ounce.

On Tuesday, gold futures slipped from a three-month high and lost over two percent, on profit taking and the greenback's rise against a basket of major currencies dragging down prices.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased to 806.82 on Wednesday from its previous close of 806.22 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 79.78 on Wednesday, down from its previous close of 79.79 late Tuesday in North American trade. The dollar scaled a high of 79.87 intraday and a low of 79.65.

The euro traded higher against the dollar at $1.3821 on Wednesday, as compared to its previous close of $1.3815 late Tuesday in North America. The euro scaled a high of $1.3850 intraday and a low of $1.3804.

In economic news from the U.S., industrial production rose more than expected in March, the Federal Reserve revealed in a report on Wednesday, with a notable upward revision to the pace of production growth in the previous month. Industrial production in the U.S. increased 0.7 percent in March after surging up by an upwardly revised 1.2 percent in February. Economists expected production to rise by about 0.5 percent compared to the 0.6 percent increase originally reported for the previous month.

Housing starts in the U.S. showed a notable increase in March, a report from the Commerce Department showed Wednesday, although still well below economist estimates. Housing starts climbed 2.8 percent to an annual rate of 946,000 in March from the revised February estimate of 920,000. Economists expected housing starts to surge up to an annual rate of 970,000 from the 907,000 originally reported for the previous month.

From Europe, U.K.'s unemployment rate fell below the 7 percent threshold, with the jobless rate at 6.9 percent of the labor force in three months to February, the lowest since February 2009, data from the Office for National Statistics showed Wednesday. This was below the 7.1 percent logged in the September to November period, and the 7.9 percent posted in the three months to February 2013. Meanwhile, the unemployment rate among the 16-24 age group was 19.1 percent.