Gold Ends Lower As Dollar Strengthens; Down 2.5% For Month

(RTTNews) - Gold futures ended lower for a third straight session Tuesday, as the dollar continued to strengthen against a basket of major currencies even as global equity markets declined.

For the month, gold futures shed about 2.5 percent.

Investors anticipate an agreement between Iran and the West regarding its nuclear program with talks moving closer to that end. However, analysts believe some of the major issues may be deferred pending a final agreement in about three months. There were news reports the talks could be extended for a day and an agreement may materialize on Wednesday.

The precious metal was also impacted after the head of the People's Bank of China hinted of the possibility of additional quantitative easing measures to prop up the Chinese economy.

The dollar's uptrend has put pressure on most commodities, including precious metals.

However, renewed expectations that the Federal Reserve will soon raise interest rates continues to pressure gold prices.

Jeffrey Lacker, the president of the Richmond Fed, said Tuesday that he expects the Fed to start raising interest rates in the near future.

"Given the improvements in the labor market and other indicators, June will likely be an appropriate time to raise the federal funds rate target," Lacker wrote ahead of speech prepared for delivery to the Greater Richmond Chamber of Commerce.

Gold for June delivery, the most actively traded contract, dropped $2.10 or 0.2 percent to settle at $1,183.20 an ounce, on the Comex division of the New York Mercantile Exchange on Tuesday.

Gold for June delivery scaled an intraday high of $1,190.60 and a low of $1,178.20 an ounce.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 737.24 tons on Tuesday, from its previous close of 743.21 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 98.42 on Tuesday, up from its previous close of 97.96 on Monday in late North American trade. The dollar scaled a high of 98.67 intraday and a low of 97.83.

The euro trended lower against the dollar at $1.0734 on Tuesday, as compared to its previous close of $1.0833 in North American trade late Monday. The euro scaled a high of $1.0847 intraday and a low of $1.0715.

In economic news, a Standard & Poor's report on Tuesday showed home prices in major U.S. metropolitan areas increased at a faster annual rate in January. The S&P/Case-Shiller 20-City Composite Home Price Index rose 4.6 percent year-over-year in January compared to a downwardly revised 4.4 percent increase in December. Economists expected the annual rate of growth to accelerate to 4.6 percent from the 4.5 percent originally reported for the previous month.

Business activity in the Chicago area unexpectedly continued to contract in March, a report from MNI Indicators showed Tuesday. MNI's Chicago business barometer edged up to 46.3 in March from 45.8 in February, although a reading below 50 continues to indicate a contraction. Economists expected the business barometer to show a more significant rebound to a reading of 51.5, which would have indicated modest growth.

Consumer confidence unexpectedly rebounded in March, a Conference Board report revealed Tuesday, with the increase driven by an improved short-term outlook for both employment and income prospects. The consumer confidence index jumped to 101.3 in March from an upwardly revised 98.8 in February. Economists expected the index to edge down to 95.5 from the 96.4 originally reported for the previous month.

Eurozone unemployment rate dropped in February to the lowest since May 2012 as companies stepped up employment amid strengthening confidence. Nonetheless, the jobless rate remained at an elevated double-digit level. The unemployment rate fell to a seasonally adjusted 11.3 percent in February from a revised 11.4 percent in January, data published by Eurostat, the statistical office of the European Union, showed Tuesday. This was the lowest rate since May 2012. Economists had forecast the rate to remain at January's originally estimated rate of 11.2 percent.

Although Eurozone inflation remained negative for the fourth consecutive month, the price decline in March was the slowest for the period, the flash estimate from Eurostat showed Tuesday. The harmonized index of consumer prices fell 0.1 percent year-on-year in March, in line with expectations. It was slower than February's 0.3 percent decline and a 0.6 percent fall seen in January.

Germany's retail sales growth eased at a slower-than-expected pace in February, preliminary figures from Destatis showed Tuesday.

Retails sales grew 3.6 percent year-over-year in February, slower than January's 5.0 percent climb, which was revised from a 5.3 percent increase. Economists had forecast a 3.4 percent growth for the month. It was the third consecutive monthly rise.

Germany's jobless rate fell to a record low in March, the Federal Labor Agency reported Tuesday. The unemployment rate dropped to a seasonally adjusted 6.4 percent in March from 6.5 percent in February. The rate came in line with economists' expectations.

Germany's jobless rate remained unchanged in February, provisional results from Destatis showed Tuesday. The jobless rate came in at adjusted 4.8 percent in February, unchanged from the prior month. The January rate was revised down from 4.7 percent. A year ago, the unemployment rate was 5.1 percent.

France's consumer spending grew for a fourth straight month in February, albeit modestly, defying economists' expectations for a decline, data from INSEE revealed Tuesday. Household consumption grew 0.1 percent from January, when it rose 0.7 percent, which was revised from 0.6 percent. Economists were looking for a 0.1 percent decline.

France's producer prices continued the declining trend in February, figures from the statistical office INSEE revealed Tuesday. Producer prices for the French market dropped 2.6 percent annually. In January, they declined 3.3 percent.

The U.K. economy grew more than the prior estimate in the fourth quarter, according to the latest report released Tuesday. Gross domestic product grew 0.6 percent sequentially in the fourth quarter, revised up from 0.5 percent published on February 26, the Office for National Statistics said. The growth was thus unchanged from the 0.6 percent expansion seen in the third quarter.