Gold Ends Modestly Lower On Strong Dollar

(RTTNews) - Gold futures slipped for a fourth straight session to end lower on Monday, still around its four-year low, as the dollar continued to strengthen on some upbeat manufacturing activity data from the U.S. with factory production at a 10-year high. Some encouraging manufacturing activity data from Europe also weighed against gold.

The precious metal had been pounded on Friday after the dollar strengthened on speculation that recent upbeat U.S. economic data may prompt the Federal Reserve to start hiking rates sooner than earlier anticipated.

In some positive economic news, manufacturing index in the U.S. rebounded in October, indicating an unexpected acceleration in the pace of growth in manufacturing activity, following the pullback seen in the previous month. However, construction spending in the U.S. unexpectedly decreased in September, largely reflecting a notable decline in spending on public construction.

Gold prices also came under pressure after some positive manufacturing activity data from the U.K., Germany, and the eurozone that also showed significant growth.

Manufacturing activity in China disappointed, after dropping to a five-month low with October Purchasing Managers' Index falling to 50.8 from 51.1 in September, the China Federation of Logistics and Purchasing said. Economists expected a reading of 51.1, the same as the September reading.

Gold for December delivery, the most actively traded contract, shed $1.80 or 0.2 percent to settle at $1,169.80 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for December delivery scaled an intraday high of $1,173.40 and a low of $1,161.00 an ounce.

On Friday, gold futures ended sharply lower by $27.00 or 2.3 percent to end at $1,171.60 an ounce. Gold shed about 5.3 percent last week. A stronger dollar on the back of some upbeat U.S. economic data and the Bank of Japan's decision to expand its monetary stimulus weighed on the yellow metal.

Last Friday, the Bank of Japan's surprise decision to expand its massive quantitative and qualitative easing prompted traders to seek riskier assets. The BOJ took the decision as policymakers deemed it necessary to achieve the 2 percent inflation target even after a sales tax hike in April.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 741.20 tons on Friday from its previous close of 742.40 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.31 on Monday, up from its previous close of 87.09 late Friday in North American trade. The dollar scaled a high of 87.40 intraday and a low of 87.02.

The euro trended lower against the dollar at $1.2483 on Monday, as compared to its previous close of $1.2507 late Friday in North American trade. The euro scaled a high of $1.2513 intraday and a low of $1.2442.

In economic news from the U.S., a report from the U.S. Commerce Department showed construction spending to have declined 0.4 percent to a seasonally adjusted annual rate of $950.9 billion in September from the revised August estimate of $955.2 billion. Economists expected construction spending to increase by about 0.6 percent.

Data from the Institute of Supply Management showed an unexpected acceleration in the pace of growth in U.S. manufacturing activity, with the index climbing to 59.0 in October, up from 56.6 in September. Economists had expected the index to dip to 56.0.

Eurozone manufacturing Purchasing Managers' Index rose to 50.6 in October, from a 14-month low of 50.3 in the previous month, data from Markit Economics showed. The flash score was 50.7.

In Asia, China's manufacturing sector continued to expand as expected in October, with HSBC manufacturing purchasing managers' index came in at 50.4. Manufacturing activity in U.K, Germany

Meanwhile, China's non-manufacturing business activity expanded at a slower rate in October, data from the National Bureau of Statistics showed Monday. The non-manufacturing business activity index decreased to 53.8 in October from 54 in September. This indicated a slower rate of growth.

From Europe, the British manufacturing sector growth accelerated at its fastest pace in three months in October on domestic demand, with the seasonally adjusted manufacturing Purchasing Managers' Index rising to a three month high of 53.2 in October from a seventeen-month low of 51.5 in September. Economists expected the score at 51.5 from September's originally estimated score of 51.6.

Germany's manufacturing sector returned to growth in October, with the Markit/BME Purchasing Managers' Index rising to 51.4 in October from a 15-month low of 49.9 in September. Nonetheless, the score was slightly below the flash estimate of 51.8.

Another report from Markit Economics showed the French manufacturing sector to have continued to contract in October, although the pace of decline was slower than initially estimated. The headline seasonally adjusted Purchasing Managers' Index fell to 48.5 in October from 48.8 in September. The flash score for October was at 47.3.

Markets are looking ahead to a slew of U.S. economic data this week. The European Central Bank is due to announce its monetary policy on Thursday, November 6.

Monthly non-farm payrolls data, weekly jobless claims report, ADP's private payrolls data for October, the results of Institute for Supply Management's manufacturing and non-manufacturing surveys for October, Markit's final U.S. manufacturing and non-manufacturing purchasing managers' indexes for October and a host of Fed speeches are scheduled for the week. The trade balance report and factory orders data are also due this week.