Gold Ends Lower As Dollar Strengthens

(RTTNews) - Gold futures ended lower on Tuesday, retreating from a near seven-week high registered yesterday, as the dollar strengthened against a basket of major currencies with little or no major economic data on view.

A strong U.S. dollar discourages holders of foreign currencies from buying dollar-denominated commodities as it makes them more expensive.

Investors also remained focused on the developments in Greece, with Athens making a claim of over $300 billion from Germany, a long-standing claim for World War II-related compensation. Berlin, however, rejected the claim indicating that the same has settled long time ago. Germany has been the most vociferous among EU member countries to insist Athens stick to its promises made to international creditors for financial aid provided, while refusing to allow any concession.

Gold futures on Monday reacted sharply to Friday's disappointing Labor Department's report that showed employment in the U.S. to have risen less than expected in March, although unemployment rate remained unchanged at 5.5 percent as expected.

The non-farm payroll employment rose by 126,000 jobs in March, even as economists expected an increase of about 245,000 jobs. However, the unemployment rate remained at a six-year low of 5.5 percent in March, in line with economist estimates.

Although analysts agreed the data to be is consistent with the softer data seen in recent months, they believe bad weather and the West Coast port disruption to have distorted the true picture for the economy.

Gold for June delivery, the most actively traded contract, dropped $8.00 or 0.7 percent to settle at $1,210.60 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

On Monday, gold futures ended sharply higher at $1,218.60 an ounce, up $17.70 or 1.5 percent, after some soft jobs report from the U.S.

Gold for June delivery scaled an intraday high of $1,215.90 and a low of $1,207.50 an ounce.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 735.45 tons on Tuesday from its previous close of 737.24 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.73 on Tuesday, up from its previous close of 97.06 on Monday in late North American trade. The dollar scaled a high of 97.79 intraday and a low of 96.93.

The euro trended lower against the dollar at $1.0845 on Tuesday, as compared to its previous close of $1.0923 in North American trade late Monday. The euro scaled a high of $1.0957 intraday and a low of $1.0836.

On the economic front, Eurozone investor confidence rose to the highest level in nearly seven-and-a-half years in April, amid signs of strengthening in the euro area economy, a survey by think tank Sentix revealed Tuesday. The investor confidence index for Eurozone climbed to 20 from 18.6 in March. The latest score was the highest since August 2007.

The Eurozone private sector continued to improve in March with the Purchasing Mangers' Index rising to an 11-month high to mark its joint highest level for almost four years. The final composite output index rose to 54 in March from 53.3 in February, final data from Markit Economics showed today. A reading above 50 indicates expansion in the private sector.

But the score was marginally below the flash estimate of 54.1. The reading reached an 11-month high and its joint-highest for almost four years.

Eurozone producer prices logged the first monthly increase in five months in February, data from Eurostat showed Tuesday. Industrial producer prices for the domestic market rose 0.5 percent from January, when they fell 1.1 percent, which was revised from 0.9 percent fall.

British services sector registered its fastest growth in seven months in March as wider economic recovery and improving confidence boosted new business, survey data from Markit Economics and the Chartered Institute of Procurement & Supply showed Tuesday.

The Markit/CIPS Purchasing Managers' Index for the services sector climbed more-than-expected to 58.9 from February's 56.7. It was the strongest growth in activity since August last year and was above the expected reading of 57.