Gold Ends Higher As Dollar Weakens, Sheds About 6.5% In July

(RTTNews) - Gold futures snapped a three-day loss to end higher on Friday, as the dollar trended lower against some major currencies after some disappointing economic data from the U.S. with a weaker than expected increase in labor costs and consumer sentiment pulling back more than previously estimated in July.

Gold futures plunged about 6.5 percent in July, the biggest monthly decline since June 2013.

In some soft economic data, a Labor Department report on Friday showed U.S. Employment Cost Index rose 0.2 percent in the second quarter. This is the lowest rise in 33 years since the beginning of the report. Economists expected the index to rise 0.7 percent. The index fell 0.6 percent to 2.0 percent year-over-year.

Consumer sentiment in the U.S. pulled back more than previously estimated in July, a report from the University of Michigan said Friday. Nevertheless, a report from MNI Indicators on Friday showed the Chicago-area business activity to have expanded far more than expected in July, after two months of contraction.

Strong U.S. economic data makes it likely the Federal Reserve will raise interest rates in September, diminishing gold's value as a hedge against inflation.

Gold for December delivery, the most actively traded contract, gained $6.40 or 0.6 percent, to settle at $1,095.10 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of $1,103.00 and a low of $1,079.20 an ounce.

On Wednesday, gold prices for August delivery dropped $4.60 or 0.4 percent, to settle at $1,088.70 an ounce, as the dollar strengthened after a slightly dovish Federal Reserve statement failed to give gold any momentum.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 680.15 tons on Friday, from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.07 on Friday, down from its previous close of 97.49 in late North American trade on Thursday. The dollar scaled a high of 97.60 intraday and a low of 96.31.

The euro trended higher against the dollar at $1.1007 on Friday, as compared to its previous close of $1.0932 in North American trade late Thursday. The euro scaled a high of $1.1116 intraday and a low of $1.0922.

On the economic front, a report from MNI Indicators on Friday showed the Chicago-area business activity to have expanded far more than expected in July, after two months of contraction.

MNI Indicators said its Chicago Business Barometer jumped to 54.7 in July from 49.4 in June, with a reading above 50 indicating growth in regional business activity. Economists had expected the index to show a more modest increase to 50.5.

Consumer sentiment in the U.S. pulled back more than previously estimated in July, a report from the University of Michigan said Friday. The consumer sentiment index for July was downwardly revised to 93.1 from the mid-month reading of 93.3. With the downward revision, the index was even further below the final June reading of 96.1. Economists expected the index to be upwardly revised to 94.1.

Eurozone inflation remained stable at 0.2 percent in July, flash data from Eurostat showed Friday. Inflation has stayed in positive territory for the third straight month and July's rate matched economists' expectations.

The euro area unemployment rate remained unchanged in June at the lowest level seen since early 2012, Eurostat reported Friday. The jobless rate held steady at 11.1 percent in June, unchanged from May. This was the lowest rate recorded in the euro area since March 2012. The rate was forecast to drop to 11 percent.

Germany's retail sales declined unexpectedly in June after rising in the previous two months, preliminary figures from Destatis showed Friday. Retail sales fell a calendar and seasonally adjusted 2.3 percent month-on-month in June, in contrast to a 0.4 percent rise in May. Economists expected a 0.3 percent increase for the month. It was the first fall in three months.

Consumer confidence in the United Kingdom stalled in June, the latest survey from polling firm GfK revealed on Friday with an index score of +4. That missed forecasts for +5 and was down from +7 in June.

French consumer spending increased for the third straight month in June at the fastest pace in five months, largely led by robust food consumption, the statistical office Insee reported Friday. Consumer spending rose 0.4 percent month-on-month in June, while economists had expected a 0.5 percent increase. In May, spending has risen 0.1 percent, the same rate of growth in April.

France's producer prices continued to decline in June, figures from the statistical office Insee showed Friday. Producer prices in the domestic market fell 1.9 percent year-over-year in June. Prices in the total industry dropped 1.4 percent, while foreign market prices rose by 0.2 percent.