Gold Ends Lower, Back Below $1200 On Greece, U.S. Data

(RTTNews) - Gold futures ended lower on Thursday, to drop back below the $1,200-mark as investors weighed a slew of economic data from the U.S. and the developments in Greece with concerns over a potential default resurfacing.

Ratings agency S&P has downgraded Greece's credit rating again, indicating that it expects other financial commitments will be "unsustainable."

Greece is in imminent danger of defaulting if bailout aid fund from international creditors are not made available, even as discussions over an extension remained inconclusive. Greek government bonds plummeted on Thursday, with yield on two-year debt rising above 27 percent.

Problems in the eurozone have raised gold's safe haven appeal, even as the dollar has strengthened against major counterparts this week.

In some disappointing economic news, weekly jobless claims for U.S. unemployment benefits increased unexpectedly, while housing starts and building permits both came in weaker than expected.

Gold for June delivery, the most actively traded contract, slipped $3.30 or 0.3 percent to settle at $1,198.00 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for June delivery scaled an intraday high of $1,208.80 and a low of $1,194.30 an ounce.

On Tuesday, gold futures gained $8.70 or 0.7 percent to settle at $1,201.30 an ounce, as the dollar weakened following some soft economic data from the U.S., with continuing uncertainty over the Federal Reserve's next move on plans to hike rates.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 736.08 tons, from its previous close of 734.29 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 97.69 on Thursday, down from its previous close of 98.40 on Wednesday in late North American trade. The dollar scaled a high of 98.72 intraday and a low of 97.68.

The euro trended higher against the dollar at $1.0779 on Thursday, as compared to its previous close of $1.0684 in North American trade late Wednesday. The euro scaled a high of $1.0779 intraday and a low of $1.0626.

On the economic front, a Labor Department report on Thursday showed initial jobless claims for U.S. unemployment benefits to have unexpectedly increased in the week ended April 11. Initial jobless claims climbed to 294,000, an increase of 12,000 from the previous week's revised level of 282,000. Economists expected jobless claims to edge down to 280,000 from the 281,000 originally reported for the previous week.

A Commerce Department report showed a rebound in new U.S. residential construction in March, although housing starts still came in well below economists' estimates for the month. The report said housing starts rose 2.0 percent to an annual rate of 926,000 in March after tumbling 15.3 percent to a rate of 908,000 in February. Economists expected housing starts to jump to a rate of 1.04 million.

The Commerce Department report also said building permits, an indicator of future housing demand, fell 5.7 percent to an annual rate of 1.039 million in March after climbing 4 percent to a rate of 1.102 million in February. Economists expected building permits to show a much more modest decrease to a rate of 1.085 million.

Growth in Philadelphia-area manufacturing activity has seen a modest acceleration in April, a report from the Federal Reserve Bank of Philadelphia said Thursday. The Philly Fed's diffusion index of current activity rose to 7.5 in April from 5.0 in March, with a positive reading indicating growth in regional manufacturing activity. Economists expected the index to inch up to 6.0.

Foreign direct investment in China increased in March from a year ago, the Commerce Ministry said on Thursday. In March, foreign direct investment climbed 2.2 percent year-over-year to $12.4 billion, which was much higher than February's 0.9 percent rise.

The leading economic index in the UK, which measures future economic activity, increased for the second straight month in February, results of a survey by the Conference Board showed Wednesday. The Conference Board's leading economic index climbed 0.6 percent in February, following a 0.2 percent rise in the previous month. It was the largest monthly increase since June 2014.