Gold Ends Higher On Weak Dollar, Soft Data

(RTTNews) - Gold futures snapped a two-day loss to end higher Thursday, with investors turning to the precious metal after global equity markets trended lower on some soft inflation and initial unemployment benefit claims data from the U.S. Gold prices found support with the dollar trending lower against a basket of some major currencies, making it cheaper for holders of foreign currencies.

In some soft economic news from the U.S., first-time claims for unemployment benefits showed a modest decline last week, dropping to a six-week low. Meanwhile, U.S. consumer prices rose in line with economists' estimates in December, with energy prices showing a notable rebound as gasoline prices jumped.

Gold for February delivery, the most actively traded contract, edged up $1.90 or 0.2 percent to close at $1,240.20 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold for February delivery scaled an intraday high of $1,244.90 and a low of $1,235.80 an ounce.

Gold settled lower yesterday, tracking rising global equity markets after some upbeat, better than expected manufacturing activity data from the New York region and on the World Bank's move to lift its growth projections for the world economy.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 789.56 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.01 on Thursday, down from its previous close of 81.03 late Wednesday in North American trade. The dollar scaled a high of 81.12 intraday and a low of 80.77.

The euro traded lower against the dollar at $1.3596 on Thursday, as compared to its previous close of $1.3605 late Wednesday in North America. The euro scaled a high of $1.3649 intraday and a low of $1.3584.

In economic news, first-time claims for U.S. unemployment benefits declined in the week ended January 11, falling to their lowest level in over a month, a report from the Labor Department showed Thursday. Initial jobless claims edged down to 326,000, a decrease of 2,000 from the previous week's revised figure of 328,000. Economists expected jobless claims to dip to 328,000 from the 330,000 originally reported for the previous week. Initial jobless claims have thus fallen to its lowest level since hitting 305,000 in the week ended November 30.

U.S. consumer prices rose in line with economists' estimates in December, with energy prices showing a notable rebound, the Labor Department said in a report on Thursday. The consumer price index rose 0.3 percent in December after coming in unchanged in November. The price growth, which matched the expectations of economists, reflected the biggest monthly increase since June. The increase was partly due to a 2.1 percent rebound in energy prices after gasoline prices jumped 3.1 percent, which followed decreases in November and October of 1.0 percent and 1.7 percent, respectively.

Manufacturing growth in the Philadelphia-area continued in January, with the index of regional manufacturing activity rising by more than expected, a report from the Federal Reserve Bank of Philadelphia showed Thursday. The Philly Fed diffusion index of current activity rose to 9.4 in January from a revised 6.4 in December, with a positive reading indicating an increase in regional manufacturing activity. Economists expected the index to climb to 8.7. A break-up shows the shipments index edged up to 12.1 in January from 11.9 in December, while the new orders index fell to 5.1 from 12.9.

A report from the National Association of Home Builders on Thursday showed homebuilder confidence in January pulled back modestly, after reporting a significant improvement in in the previous month. The NAHB/Wells Fargo Housing Market Index edged down to 56 in January from a downwardly revised 57 in December. Economists expected the index to come in unchanged compared to the 58 originally reported for the previous month. Despite the unexpected pullback, the housing market index remains above the reading of 54 recorded in November.

The Chicago business barometer came in higher than previously estimated in December as a result of the annual seasonal adjustment recalculation, according to a report from MNI Indicators on Thursday. The Chicago business barometer for December came in at 60.8 compared to the previously reported 59.1. A reading above 50 indicates growth in Chicago-area business activity. The barometer was revised lower in the first quarter but was upwardly revised in both the third and fourth quarters, pointing to an even stronger second half than initially estimated.