Gold Settles Lower On Weak Dollar, Soft Data

(RTTNews) - Gold futures ended lower for a second straight session on Thursday, easing from a 3-month high with some soft economic data out of China indicating a slowdown. Nonetheless, the precious metal pulled back some of the losses after data showed first-time claims for unemployment benefits in the U.S. fell less than expected, even as consumer price inflation rose in line with expectations in January.

Chinese manufacturing sector contracted for a second straight month in February, with the activity indicator dropping to a seven-month low, as a renewed fall in new orders dragged production lower, suggesting that the economic recovery is losing momentum, a closely-watched survey showed Thursday.

Meanwhile, retail inflation in the U.S. remained in check in January, with new government statistics indicating a slight increase in consumer prices for the month.

The U.S. Labor Department said initial jobless claims fell modestly, as layoff activity moderated a bit last week. Manufacturing conditions in the Philadelphia region significantly worsened in January due to the severe winter weather, according to a Philadelphia Federal Reserve survey.

Gold for April delivery, the most actively traded contract, dropped $3.50 or 0.3 percent to close at $1,316.90 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for April delivery scaled an intraday high of $1,316.50 and a low of $1,309.60 an ounce.

Gold lost some of its shine yesterday afternoon when Federal Reserve minutes revealed most voting members are determined to carry on with tapering their stimulus plan despite signs the U.S. economy has hit a rough patch.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped to 795.61 tons from 801.25 tons previously.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.37 on Thursday, up from its previous close of 80.20 late Wednesday in North American trade. The dollar scaled a high of 80.42 intraday and a low of 80.03.

The euro traded lower against the dollar at $1.3709 on Thursday, as compared to its previous close of $1.3733 late Wednesday in North America. The euro scaled a high of $1.3762 intraday and a low of $1.3686.

In economic news, Chinese manufacturing sector contracted with the seasonally adjusted flash Markit/HSBC Purchasing Mangers' Index, which gauges manufacturing activity in factories and workshops, dropped to 48.3 in February from 49.5 in January -- the index declining for the fist time in six months. Economists expected the index to have remained unchanged at 49.5.

A report from the U.S. Labor Department showed initial jobless claims fell by 3,000 to 336,000 for the week ended February 15. This followed an unrevised reading of 339,000 in the previous week. Economists expected claims at 335,000. Jobless claims measure the number of people filing for first-time unemployment benefits. It is considered a good gauge of recent layoff activity, providing a glimpse at the health of the labor market.

The Philadelphia Fed's manufacturing index dropped sharply to a reading of negative 6.3 in February from a 9.4 reading in January. Economists expected a positive reading of 8. The Philadelphia Fed Index questions manufacturers on general business conditions. Values greater than zero indicate economic growth, while values less than zero indicate contraction.

The Conference Board's Leading Economic Index for the U.S. increased 0.3 percent in January to 99.5, suggesting the economy did not lose much momentum despite severe winter weather across much of the nation. This follows no change in December, and a 0.9 percent increase in November.

The U.S. Labor Department revealed that consumer prices advanced 0.1 percent in January, following an increase of 0.2 percent in the previous month. Economists expected the a rise of 0.1 percent.

Elsewhere, eurozone private sector economy expanded for the eighth successive month in February, albeit at a slower pace as recovery remains fragile and uneven, a closely-watched survey revealed Thursday. Purchasing Managers' survey by Markit Economics showed eurozone private sector economy flash composite output index, which measures the performance of manufacturing and services, dropped to 52.7 in February from January's 31-month high of 52.9. Economists were looking for a score of 53.1.

Home building in England reached a six-year high last year, but completions declined, data from the Department for Communities and Local Government showed Thursday. Housing starts rose 23 percent annually to 122,590 in 2013, the highest since 2007. Housing completions totaled 109,370, down 5 percent from 2012.