Gold Ends Sharply Higher On Global Cues

(RTTNews) - Gold futures snapped a two-day loss to end sharply higher on Thursday, tracking declining global equity markets after some soft economic data from China and on demand growth prospects with reports that India may ease curbs on import of the precious metal. Gold ended at a more than two-month high, finding further support with the dollar weakening against a basket of major currencies, making it attractive for holders of foreign currencies.

A key indicator of China's factory sector performance declined sharply in January to a level indicating contraction in business activity, as the volume of new work inflow declined, flash results of a survey by Markit Economics and HSBC revealed Thursday.

The Conference Board report on Thursday showed its index of leading U.S. economic indicators rose modestly in December, partly reflecting improvements in the financial components. Meanwhile, a Labor Department report showed first-time claims for U.S. unemployment benefits edged up last week, albeit lesser than expected, after having dropped to its lowest level in over a month in the previous week.

Meanwhile, India could relax curbs on gold imports after the powerful Congress President Sonia Gandhi, who is also the head of the ruling coalition, called for loosening import restrictions on the precious metal. India, the largest consumer of gold in the world, had imposed severe restrictions on gold imports to limit its current account deficit, including import duties as high as 10 percent.

Gold for February delivery, the most actively traded contract, soared $23.70 or 1.9 percent to close at $1,262.30 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for February delivery scaled an intraday high of $1,267.00 and a low of $1,230.80 an ounce.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, declined to 795.85 tons from 797.05 tons previously.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.55 on Thursday, down from its previous close of 81.19 late Wednesday in North American trade. The dollar scaled a high of 81.31 intraday and a low of 80.53.

The euro traded higher against the dollar at $1.3691 on Thursday, as compared to its previous close of $1.3547 late Wednesday in North America. The euro scaled a high of $1.3692 intraday and a low of $1.3531.

In economic news, first-time claims for U.S. unemployment benefits for the week ended January 18 edged up to 326,000, an increase of 1,000 from the previous week's revised figure of 325,000. Economists expected claims at 330,000 from the 326,000 originally reported for the previous week. Nonetheless, the less volatile four-week moving average dropped to 331,500 from the previous week's revised average of 335,250, hitting its lowest level since the first week of December.

Existing home sales in the U.S. rebounded in December after seeing a sharp drop the previous month, a report from the National Association of Realtors showed Thursday. Existing home sales climbed 1.0 percent to an annual rate of 4.87 million in December after tumbling 5.9 percent to a downwardly revised 4.82 million in November. Economists expected existing home sales to edge up to 4.93 million from the 4.90 million originally reported for the previous month.

Partly reflecting improvements in the financial components, a Conference Board report on Thursday its leading economic index edged up by 0.1 percent in December following an upwardly revised 1.0 percent increase in November. Economists expected a rise of about 0.2 percent compared to the 0.8 percent advance originally reported for the previous month.

Elsewhere, in China, the headline purchasing managers' index, a key indicator of China's factory sector performance, fell to a six-month low of 49.6 in January from 50.5 in December. An index reading above 50 indicates expansion of the sector while a reading below 50 suggests contraction. The contraction was attributed to a decline in the volume of new work inflow.

Eurozone's private sector growth accelerated more-than-expected in January, led by a further strong expansion in Germany, with both the manufacturing and service sectors recording above-trend improvement in business activity. The activity indicator for the euro area private sector climbed to 53.2 from 52.1 in December, and stayed above the no-change 50 mark for the seventh successive month. Economists expected the index to rise to 52.5.