Gold Ends Lower On Positive U.S. Data, Strong Dollar

(RTTNews) - Gold futures slipped to end lower on Thursday, after a slew of largely positive data from the U.S. with the dollar trending sharply higher against a select band of currencies. Nonetheless, the losses were somewhat limited after the European Central Bank slashed its benchmark interest rate to a record low.

In economic news, a report from payroll processor ADP on Thursday showed another notable increase in U.S. private sector employment in August, although the pace of job growth was once again below economists' estimates.

Meanwhile, U.S. service sector activity expanded for the fifty-fifth consecutive month in August, a report from the Institute for Supply Management said Thursday, showing an unexpected acceleration in the pace of growth in the sector.

Labor productivity in the U.S. increased 2.3 percent, albeit less than estimated in the second quarter, a Labor Department report showed Thursday. However, first-time claims for U.S. unemployment benefits rose more than expected in the week ended August 30, according to a report released by the Labor Department on Thursday.

In a surprise move, the European Central Bank earlier today cut its benchmark interest rate to a record low of 0.05 percent from 0.15 percent.

The central bank also reduced its deposit facility rate to -0.2 percent. The marginal lending rate has been cut to 0.3 percent from 0.4 percent earlier. Markets are now looking ahead to the post meeting comments from the ECB President Mario Draghi.

Meanwhile, the Bank of England has left its interest rate unchanged at 0.5 percent, as expected.

Gold for December delivery, the most actively traded contract, dropped $3.8 or 0.3 percent to close at $1,266.50 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for December delivery scaled an intraday high of $1,279.20 and a low of $1,265.50 an ounce.

On Wednesday, gold futures ended higher on bargain hunting after suffering a severe setback a day earlier on some upbeat U.S. economic data.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 790.51 tons on Thursday, from its previous close of 793.20 tons on Wednesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 83.76 on Thursday, up from its previous close of 82.85 late Wednesday in North American trade. The dollar scaled a high of 83.87 intraday and a low of 82.84.

The euro trended lower against the dollar at $1.2955 on Thursday, as compared to its previous close of $1.3150 late Wednesday in North American trade. The euro scaled a high of $1.3153 intraday and a low of $1.2922.

In economic news from the U.S., private sector employment rose less than expected with 204,000 jobs in August following a downwardly revised increase of 212,000 jobs in July, data released by ADP showed. Economists expected jobs to rise by about 220,000 in the month.

According to a report from the Labor Department, first-time claims for U.S. unemployment benefits rose slightly more than expected to 302,000 in the week ended August 30, from the previous week's unrevised level of 298,000. Economists anticipated claims to tick up to 300,000 in August.

A Commerce Department report on Thursday showed U.S. trade deficit unexpectedly narrowed in July, reflecting moderate increases in the value of both imports and exports. U.S. trade deficit narrowed to $40.5 billion in July from a revised $40.8 billion in June. Economists expected the deficit to widen to $42.3 billion from the $41.5 billion originally reported for the previous month.

Meanwhile, labor productivity in the U.S. increased by less than previously estimated in the second quarter, rising 2.3 percent. Earlier estimates had pegged productivity growth at 2.5 percent. The report also said unit labor costs edged down by a revised 0.1 percent in the second quarter versus the 0.6 percent increase originally reported.

A report from the Institute for Supply Management showed activity in the U.S. service sector to have unexpectedly expanded at an accelerated rate to 59.6 in August, from 58.7 in the preceding month.

The European Central Bank which cut its key rates today, cut its growth forecast for this year to 0.9 percent from 1 percent predicted in June. The outlook for 2015 was lowered to 1.6 percent from 1.7 percent.

The inflation outlook for 2014 was cut to 0.6 percent from 0.7 percent, while projections for 2015 and 2016 were retained at 1.1 percent and 1.4 percent, respectively.