Gold Surges To End Higher On Safe Haven Buying

(RTTNews) - Gold futures surged to end sharply higher for a second straight session Thursday, with investors seeking safe haven in the precious metal while tracking sharply declining U.S. equity markets. A slew of upbeat macroeconomic data from the U.S. and Europe again renewed investor concerns the Federal Reserve would likely slash its quantitative easing program, sooner rather than later.

Gold prices were also supported by speculations that physical demand will help support bullion prices after recent data revealed higher gold consumption in India and China, the two largest consumers of gold in the world.

Gold consumption in India rose to 310 tonnes in the second quarter ended June, its highest level in the last 10 years, a WGC report showed. Earlier this week, the China Gold Association said China consumed 706.36 tonnes of gold in the first half of 2013, up 54 percent from the year-ago period.

Gold for December delivery, the most actively traded contract, jumped $27.50 or 2.1 percent to close at $1,360.90 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold for December delivery scaled an intraday high of $1,367.90 and a low of $1,317.90 an ounce.

Yesterday, gold settled higher on bargain buying and with the dollar trading lower against a basket of select currencies. Some soft economic data from the U.S. also supported the precious metal with producer prices coming in unchanged. Nonetheless, anxiety over the U.S. Federal Reserve's plans to tone down its quantitative easing program in the near future capped big gains.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.30 on Thursday, down from 81.71 late Wednesday in North American trade. The dollar scaled a high of 81.94 intraday and a low of 81.21.

The euro traded higher against the dollar at $1.3312 on Thursday, as compared to $1.3256 late Wednesday in North America. The euro scaled a high of $1.3341 intraday and a low of $1.3203.

In economic news from the U.S., the Labor Department said initial jobless claims fell to 320,000, a decrease of 15,000 from the previous week's revised figure of 335,000. Economists had expected jobless claims to edge down to 330,000 from the 333,000 originally reported for the previous week. With the bigger than expected decrease, the claims fell to its lowest level since hitting 316,000 in the week ended October 6, 2007.

Homebuilder confidence in the U.S. has unexpectedly improved in August with the index rising to its highest level in nearly eight years. The NAHB/Wells Fargo Housing Market Index rose to 59 in August from a downwardly revised 56 in July. Economists expected the index to decline to 56 from the 57 originally reported for the previous month. The housing market index rose for the fourth consecutive month, reaching its highest level since hitting 61 in November 2005.

In a separate report, the Labor Department said its consumer price index rose by 0.2 percent in July following a 0.5 percent increase in June. The modest increase in prices matched economist estimates. The core consumer price index, which excludes food and energy prices, also edged up by 0.2 percent. The core price growth matched the increases seen in the two previous months as well as expectations.

Meanwhile, the Federal Reserve Bank of New York said its general business conditions index dipped to 8.2 in August from 9.5 in July. A positive reading indicates growth in regional manufacturing activity, but economists had expected the index to climb to a reading of 10.0.

A Federal Reserve Bank of Philadelphia report on Thursday showed manufacturing activity expanded at a much slower than expected rate in August, after having reported a significant improvement in regional manufacturing activity in the previous month,

The Philly Fed's diffusion index of current activity dropped to 9.3 in August from 19.8 in July. While a positive reading indicates continued growth in regional manufacturing activity, economists had expected a more modest decrease to a reading of 15.0. The steep drop came after having reached its highest level since March 2011 in the previous month.

Elsewhere, U.K. retail sales growth accelerated more than expected in July reflecting robust food store sales, data showed. Including automotive fuel, retail sales advanced 1.1 percent from prior month, following a 0.2 percent rise in June, the Office for National Statistics said. The rate of growth was expected to rise moderately to 0.7 percent.