Gold Ends Higher On Fed Move, Weak Dollar

(RTTNews) - Gold futures surged for a fourth straight day to settle at a near three-week high Thursday, with the dollar weakening against some major currencies after the U.S. Federal Reserve indicated it would continue to maintain its quantitative easing policy. Investors also weighed comments by Fed Reserve Chairman Ben Bernanke that the central bank will continue to hold interest rates at a low level even after unemployment rate touches the targeted 6.5 percent.

Elsewhere, the Bank of Japan kept its monetary easing program unchanged in line with forecast, while revising upward its assessment of the economy on "signs of recovery." The program aimed at reversing 15 years of deflation in the economy, was launched in April after Haruhiko Kuroda took charge at the central bank. The Bank of Japan indicated the economy beginning to recover moderately, upgrading its assessment from June when it said "the economy has been picking up."

Gold for August delivery, the most actively traded contract, soared $32.50 or 2.6 percent to close at $1,279.90 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold for August delivery scaled an intraday high of $1,297.20 and a low of $1,262.10 an ounce.

Yesterday, gold settled higher as the US dollar weakened against a basket of major currencies ahead of the U.S. Federal Open Market Committee policy meet outcome. Investors also weighed some disappointing inflation data from China yesterday and rising oil prices, making gold an attractive option.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved down to 939.07 tons from 939.75 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.02 on Thursday, down from 83.09 late Wednesday in North American trade. The dollar scaled a high of 83.25 intraday and a low of 82.42. Nonetheless, the greenback was way behind its early high of 84.49.

The euro traded higher against the dollar at $1.3047 on Thursday, as compared to $1.2976 late Wednesday in North America. The euro scaled a high of $1.3204 intraday and a low of $1.2966.

In economic news from the U.S., the Labor Department said initial jobless claims rose to 360,000, an increase of 16,000 from the previous week's revised figure of 344,000. The increase surprised economists, who had been expecting jobless claims to ease to 340,000 from the 343,000 originally reported for the previous week.

In a separate report, the department said imports prices fell by 0.2 percent in June following a revised 0.7 percent decrease in May. Economists had been expecting import prices to inch up by 0.1 percent. Additionally, the report indicated export prices to have edged down 0.1 percent in June after dropping by 0.5 percent in the previous month. The drop in export prices were in line with economists' estimates.

From the eurozone, Germany's whole sale prices increased modestly in June after falling for two months in a row, latest data from the Federal Statistical Office showed. The wholesale price index increased 0.7 percent on an annual basis in June, reversing decreases of 0.1 percent and 0.4 percent recorded in May and April. Economists were looking for an increase of 1 percent.

Meanwhile, the Bank of Japan on Thursday decided to keep its monetary easing program unchanged, while upwardly revising its assessment of the economy citing signs of recovery. The nine-member policy board unanimously decided to keep the target of the monetary base expansion at an annual pace of JPY 60-70 trillion, in line with expectations.