Gold Ends Lower As Dollar Strengthens

(RTTNews) - Gold futures ended lower on Monday, after having recorded a sharp rise last Friday, with the dollar trending higher against a basket of major currencies, even as the precious metal's appeal as an alternate investment waned.

In some disappointing economic news, Japan -- the world's third largest economy, slipped into recession in the third quarter, forcing Prime Minister Sinzo Abe to postpone a second sales tax increase.

In other soft economic news from the U.S., industrial production unexpectedly declined in October, with falling mining and utilities output offsetting an uptick in manufacturing output, a Federal Reserve report said Monday. Meanwhile, a Federal Reserve Bank of New York report showed a rebound in its index of regional manufacturing activity in November, albeit less than what analysts expected.

Gold for December delivery, the most actively traded contract, shed $2.10 or 0.2 percent to settle at $1,183.50 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

Gold for December delivery scaled an intraday high of $1,193.60 and a low of $1,180.80 an ounce.

On Friday, gold futures ended up $24.10 or 2.1 percent at $1,185.60 an ounce, due mainly to a weak dollar. Last week, gold gained about 1.5 percent, rising from a 4-year low near $1,130 as a number of Federal Reserve speakers foreshadowed a U.S. interest rate hike may come sooner than expected.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 720.62 tons on Monday from its previous close of 722.67 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 87.92 on Monday, up from its previous close of 87.60 late Friday in North American trade. The dollar scaled a high of 87.97 intraday and a low of 87.18.

The euro trended lower against the dollar at $1.2454 on Monday, as compared to its previous close of $1.2533 late Friday in North American trade. The euro scaled a high of $1.2577 intraday and a low of $1.2446.

In economic news from the U.S., industrial production unexpectedly saw a modest decline in October, a report from the Federal Reserve showed Monday, with falling mining and utilities output offsetting an uptick in manufacturing output. Industrial production edged down by 0.1 percent in October following a downwardly revised 0.8 percent increase in September. Economists expected production to inch up by 0.2 percent compared to the 1.0 percent jump originally reported for the previous month.

A Federal Reserve Bank of New York report on Monday showed a rebound in its index of regional manufacturing activity in Novemeber, after a substantial slowdown in the pace of growth in the New York manufacturing sector in the previous month. The New York Fed's general business conditions index climbed to 10.2 in November from 6.2 in October. Economists expected the index to rise to a reading of 11.0.

Japan said its economy unexpectedly contracted by an annualized 1.6 percent in the July-September quarter, following a 7.3 percent contraction in the prior quarter. Economists expected the economy to grow by 2.1 percent.

Eurozone trade surplus increased to a seasonally adjusted EUR 17.7 billion from EUR 15.4 billion in August, data from Eurostat showed Monday. Exports grew 4.2 percent in September from August, when it fell 1.4 percent. Similarly, imports rose 3 percent reversing the 3.2 percent drop a month ago.

Germany's Bundesbank on Monday reiterated its opposition to increasing investment to boost the German economy as well as the euro area, indicating the biggest eurozone economy is likely to register only a modest growth in the final three months of the year. In its monthly report, the bank said any additional debt-financed economic stimulus package would do little to support the economic situation in Germany.

The German Central Bank said the comparatively small stimuli it can provide also would not be of much benefit to the eurozone. During the current uncertain economic situation, it was appropriate to continue the fiscal policy reforms to boost the economy, the Bundesbank said.

Traders are looking ahead to some crucial economic data, including reports on U.S. housing market and manufacturing activity, this week.

Markit's preliminary manufacturing PMI report for November, the Federal Reserve's industrial production report for October, the minutes of the October FOMC meeting, the jobless claims report, the Labor Department's report on producer prices for final demand and consumer price inflation, the Conference Board's leading economic indicators index for October are due in the course of this week, besides some Fed speeches.