Gold Settles Higher On Soft Data, Weak Dollar

(RTTNews) - Gold futures ended higher for a ninth straight day on Tuesday, on profit taking and after some data showing soft manufacturing activity in the New York area, taking cue from the equity market. The precious metal also found support with the dollar weakening against a basket of major currencies, making it attractive to buyers holding other currencies.

A closely watched regional survey showed manufacturing activity in New York State expanded in February but at a slower pace, as factories received fewer new orders with a significant slackening in the growth in shipments.

The Federal Reserve Bank of New York said its Empire State Index, a measure of business activity in New York State, slipped to 4.48 for February, down from a reading of 12.51 for January. Economists expected the Empire State index at about 8.5.

Meanwhile, the World Gold Council on Tuesday said global demand for the precious metal in 2013 dropped 15 percent, in part due to the outflows from the physically backed exchange traded funds being greater than consumer demand. The Council also indicated China as the largest consumer of gold, with demand up 4 percent while demand from India dropped 16 percent.

Gold for April delivery, the most actively traded contract, gained $5.80 or 0.4 percent to close at $1,324.40 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for April delivery scaled an intraday high of $1,332.40 and a low of $1,312.30 an ounce.

Last week, gold prices rose sharply amid renewed expectations that the Federal Reserve will maintain ultra-low interest rates through next year. Gold gained 4.4 percent last week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 801.25 tons from 806.35 tons previously.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.01 on Tuesday, down from its previous close of 80.16 late Friday in North American trade. The dollar scaled a high of 80.23 intraday and a low of 79.96.

The euro traded higher against the dollar at $1.3758 on Tuesday, as compared to its previous close of $1.3707 late Friday in North America. The euro scaled a high of $1.3770 intraday and a low of $1.3696.

In economic news, confidence in the home building sector in the U.S. deteriorated lately, an industry survey showed Tuesday. The National Association of Home Builders said its housing market index slipped to 46 in February compared to a reading of 56 last month. Economists expected the measure to remain steady.

From Europe, consumer price inflation in the U.K. dropped below the 2 percent target for the first time since November 2009, giving room for the Bank of England to leave its record low interest rates unchanged for some more time and avoid any rate hike that risks economic recovery. Factory-gate inflation also moderated in January, reflecting decreases in petroleum and pharmaceutical products.

Consumer price inflation in the U.K. eased to 1.9 percent in January from 2 percent in December, the Office for National Statistics said Tuesday. The rate was expected to remain at 2 percent.

Meanwhile, Germany's investor confidence deteriorated for the second straight month in February, reversing the improving trend seen in recent months, amid concerns over the faltering recovery in emerging market economies and the subdued outlook for the U.S. recovery. The indicator, which measures investors' views of the economy over the next six months, dropped to to 55.7 in February from 61.7 in January, a survey by the Centre for European Economic Research/ZEW revealed Tuesday. Economists expected the score at 61.5.