Gold Ends Higher As Dollar Weakens

(RTTNews) - Gold futures snapped a three-day loss to end higher on Thursday, as investors await some crucial monthly non-farm payrolls data due tomorrow, even as the dollar weakened against some select currencies. The gains made by the precious metal were capped after some upbeat data earlier today showed first time unemployment benefit claims in the U.S. dropped more than expected. The encouraging jobless claims benefits data renewed speculations the Federal Reserve would continue tapering its quantitative easing program through the year.

In an upbeat sign for the U.S. economy, a report from Labor Department showed first-time claims for U.S. unemployment benefits fell more than expected to a one-month low in the week ended January 4. The less volatile four-week moving average also declined from the previous week's revised average.

Minutes of the Federal Reserve's most recent policy meet that concluded yesterday indicated the central bank tapered its massive bond-buying program in December due to diminishing returns on the billions spent to keep the economic recovery going. Policy makers worried about the potential for excessive risk-taking in the financial sector, similar to the speculative lending that caused the panic of 2007 in the first place.

Meanwhile, Bank of America Merrill Lynch on Thursday slashed gold prices forecast 11 percent and now anticipate prices at $1,150 an ounce for 2014.

Gold for February delivery, the most actively traded contract, edged up $3.90 or 0.3 percent to close at $1,229.40 an ounce Thursday on the Comex division of the New York Mercantile Exchange.

Gold for February delivery scaled an intraday high of $1,230.90 and a low of $1,222.80 an ounce.

Yesterday, gold settled lower on some heavy selling pressure after some upbeat private jobs data from the U.S. with the dollar strengthening against a basket of major currencies

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, on Thursday dropped to 793.12 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 81.04 on Thursday, down from its previous close of 81.07 late Wednesday in North American trade. The dollar scaled a high of 81.19 intraday and a low of 80.85.

The euro traded higher against the dollar at $1.3587 on Thursday, as compared to its previous close of $1.3575 late Wednesday in North America. The euro scaled a high of $1.3633 intraday and a low of $1.3550.

In economic news from the U.S, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits dropped more than expected in the week ended January 4. Initial jobless claims declined to 330,000, a decrease of 15,000 from the previous week's revised figure of 345,000. Economists expected jobless claims to edge down to 335,000 from the 339,000 originally reported for the previous week.

Jobless claims came in at its lowest level since dropping to 305,000 in the week ended November 30. The less volatile four-week moving average fell to 349,000, a decrease of 9,750 from the previous week's revised average of 358,750.

Consumer credit in the U.S. increased less than expected in November, a report from the Federal Reserve showed. Consumer credit rose $12.3 billion in November after jumping by $17.9 billion in October. Economists expected credit to increase by about $14.2 billion.

China's consumer price inflation eased for a second consecutive month in December to reach its weakest level in seven months, data from the National Bureau of Statistics revealed Thursday. The annual consumer price inflation fell to 2.5 percent in December from 3 percent in November. Economists anticipated a slowdown to 2.7 percent. On a monthly basis, the consumer price index rose 0.3 percent. In the whole of 2013, inflation was 2.6 percent, well below the government's target of 3.5 percent.

China's producer prices extended its decline to 22 months in December, fueling concerns over industrial overcapacity.

The European Central Bank left interest rates unchanged at a record low at the start of the year, as it battles deflationary tendencies, while a gradual recovery has become more evident in the 18-nation economy. The ECB kept the main refinancing rate unchanged at 0.25 percent on Thursday, for a second straight month following their meeting in Frankfurt. The decision was in line with economists' expectations. The marginal lending facility rate was held at 0.75 percent. The deposit facility rate was kept at zero, where it has remained since July 2012.

Meanwhile, European Central Bank President Mario Draghi in his customary post-decision press conference in Frankfurt reiterated that the 18-nation economy is set to experience a protracted period of low inflation and asserted that the bank will maintain easy policy for as long as needed.

Elsewhere in Europe, the Bank of England kept its monetary policy unchanged as policymakers closely monitor the economic recovery and developments in the U.K. labor market. The nine-member Monetary Policy Committee headed by Governor Mark Carney, maintained the key interest rate at a record-low 0.50 percent. The central bank also retained the quantitative easing at GBP 375 billion.