Gold Ends Below $1,300 On Strong Dollar

(RTTNews) - Gold futures ended modestly lower on Friday, on some mixed global economic data with the dollar trending sharply higher even as the euro slipped significantly after the European Central Bank announced a massive, larger than expected monetary stimulus yesterday.

Gold jumped to 5-month highs just above $1300 earlier in the week, but a rapidly rising dollar thwarted the rally in bullion. Analysts say gold may have a hard time extending far beyond $1300 as long as the dollar continues its relentless attack on the euro.

The ECB on Thursday announced the launch of an expanded asset purchase program with combined monthly purchases of 60 billion euros or $70 billion, through end September 2016. ECB President Mario Draghi said the stimulus package will help push inflation back toward 2 percent in late 2015.

With the dollar traded at an 11-year peak, with the precious metal finding it difficult to forge ahead with the gains made yesterday.

However, concerns about the global economy should sustain gold's safe haven appeal, keeping prices afloat until sunnier times in China and Europe. There was little sustained reaction to the European Central Bank's plan to spend more than 1 trillion euros to revive growth and combat deflation.

Gold for February delivery, the most actively traded contract, gained $8.10 or 0.6 percent, to settle at $1,292.60 an ounce on the Comex division of the New York Mercantile Exchange on Friday.

Gold for February delivery scaled an intraday high of $1,302.90 and a low of $1,284.30 an ounce.

On Wednesday, gold modestly higher at $1,300.70 an ounce, down $7.00 or 0.5 percent, after the European Central Bank announced a massive monetary stimulus package that was larger than market expectations.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 740.45 tons on Friday from its previous.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.78 on Friday, up from its previous close of 94.20 late Thursday in North American trade. The dollar scaled a high of 95.48 intraday and a low of 94.11.

The euro trended lower against the dollar at $1.1241 on Friday, as compared to its previous close of $1.1368 late Thursday in North American trade. The euro scaled a high of $1.1374 intraday and a low of $1.1118.

On the economic front, existing home sales in the U.S. rose roughly in line with economist estimates in December, with sales rebounding from the steep drop seen in November, a report from the National Association of Realtors showed Friday.

NAR said existing home sales rose 2.4 percent to a seasonally adjusted annual rate of 5.04 million in December after tumbling 6.3 percent to a downwardly revised 4.92 million in November. Economists expected sales to climb to an annual rate of 5.05 million from the 4.93 million originally reported for the previous month.

Reflecting positive contributions from a majority of components, a Conference Board report on Friday showed its index of leading U.S. economic indicators rose slightly more than anticipated in December.

The Conference Board said its leading economic index climbed by 0.5 percent in December following a downwardly revised 0.4 percent increase in November. Economists expected the index to rise by 0.4 percent compared to the 0.6 percent advance originally reported for the previous month.

A flash reading of the Markit's U.S. manufacturing purchasing managers index for January dipped to 53.7 from 53.9 in December. This was the lowest reading in 12 months.

Meanwhile, the Chicago Fed's national activity index in December showed a negative 0.05 from a positive 0.92 in November, suggesting the U.S. economy grew at a below-trend rate in December. The index is a weighted average of 85 different economic indicators.

Eurozone private sector grew at the fastest pace in five months in January, flash survey data from Markit Economics showed Friday. The composite output index rose more-than-expected to a five-month high of 52.2 in January from 51.4 in December. Economists had forecast the index to rise nominally to 51.7.

Germany's private sector in January remained in expansion territory, signaling a further rise in private sector output. The flash composite output index rose to 52.6 in January from 52 in December. This was the strongest growth in three months.

The French private sector contracted further at the start of 2015, flash data from Markit Economics showed Friday. The composite output index dropped to 49.5 in January from 49.7 in December.

French business confidence remained stable in January, survey data from the statistical office Insee showed Friday. The business confidence index for manufacturers held steady at 99 in January as expected by economists.

British retail sales logged an unexpected growth in December, driven by food sales, while economists anticipated a decline after a rebound in November on Black Friday sales.

The volume of retail sales, including automotive fuel, increased 0.4 percent month-over-month in December, but the growth was slower than the 1.6 percent rise in November, data from the Office for National Statistics showed Friday. Sales were expected to decline 0.6 percent.

China's manufacturing sector barely contracted in January, with a PMI score of 49.8, a survey from HSBC Bank showed on Friday. That beat the forecast of 49.5 and was up from 49.6 in December, although it remained below the boom-or-bust line of 50 that separates expansion from contraction.