Gold Ends At $1,225 On A 3-Month High

(RTTNews) - Gold futures moved up for a third straight session to end at a three-month high on Thursday, consolidating gains as the dollar dipped to its lowest of the year against the euro after a recent batch of weak economic data from the U.S. The correction in the dollar has given commodity prices a lift this week, with gold futures scaling a three-month high intraday.

In some soft economic data, a Labor Department report on Thursday showed an unexpected drop in U.S. producer prices in April, reflecting a sharp pullback in energy prices. A drop in producer prices indicates inflation to be under check. Combined with the recent disappointing retail sales data, the drop in prices further reinforces the view that the Federal Reserve could delay its planned increase in interest rates.

Nevertheless, the gains were capped after first-time claims for U.S. unemployment benefits declined unexpectedly in the week ended May 9, a report from the Labor Department said.

Meanwhile, global demand for gold dropped one percent in the first quarter, on some soft buying in major markets, the World Gold Council said in its Gold Demand Trend report Thursday. Demand for the precious metal in the first quarter dropped to 1,079 tons, from 1,090 tons recorded in the prior-year quarter.

Fears of a Greek default and subsequent problems for the eurozone have also helped gold's safe haven appeal.

Gold for June delivery, the most actively traded contract, gained $7.00 or 0.6 percent to settle at $1,225.20 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for June delivery scaled an intraday high of $1,227.70 and a low of $1,211.90 an ounce.

On Wednesday, gold futures jumped $25.80 or 2.2 percent to settle at $1,218.20 an ounce, as the dollar continued to weaken after some soft economic data from the U.S. with April retail sales coming in weaker than expected, fueling speculations of a delay in the Fed Reserve's interest rate hike plans.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 728.32 tons on Thursday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 93.58 on Thursday, down from its previous close of 93.62 on Wednesday in late North American trade. The dollar scaled a high of 93.76 intraday and a low of 93.13.

The euro trended higher against the dollar at $1.1376 on Thursday, as compared to its previous close of $1.1353 in North American trade late Wednesday. The euro scaled a high of $1.1446 intraday and a low of $1.1342.

On the economic front, the unexpected decline in weekly jobless claims has provided a boost to investor sentiment with first-time claims for U.S. unemployment benefits unexpectedly declining in the week ended May 9, a report from the Labor Department showed Thursday. Initial jobless claims edged down to 264,000, a decrease of 1,000 from the previous week's unrevised level of 265,000. Economists expected initial jobless claims to climb to 275,000.

A Labor Department report on Thursday showed an unexpected decrease in U.S. producer prices in April, reflecting a sharp pullback in energy prices. The producer price index for final demand fell 0.4 percent in April after edging up 0.2 percent in March. The index was expected to show another 0.2 percent increase.