Gold Surges To End At 4-Month High After Swiss Move

(RTTNews) - Gold futures surged for a fifth straight session to end at a four-month high on Thursday, after investors took to the precious metal following the Swiss National Bank's shock decision to abandon its currency ceiling.

Gold also found support on some soft economic data from the U.S., with first time claims for unemployment benefits jumping to a four-month high and manufacturing activity in the Philadelphia area growing at a notably slower pace in January.

The Swiss National Bank ended the three-year minimum exchange rate of CHF 1.20 per euro, the central bank said in a statement on Thursday. The move is seen as a precursor to the European Central Bank further weakening the euro by the anticipated announcement full-scale quantitative easing in the coming months.

In a potentially troubling sign for the labor market, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have jumped to a four-month high in the week ended January 10. Separately, a Labor Department report showed U.S. producer prices to have recorded their biggest drop in over three years in December, with energy prices declining substantially.

However, business activity for New York manufacturers expanded in January, after reporting an unexpected contraction in regional manufacturing activity in the previous month, a Federal Reserve Bank of New York report showed. Nevertheless, manufacturing activity in the Philadelphia area grew at a notably slower pace in January, the Federal Reserve Bank of Philadelphia said earlier today.

Gold for February delivery, the most actively traded contract, soared $30.30 or 2.5 percent to settle at $1,264.80 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for February delivery scaled an intraday high of $1,267.20 and a low of $1,226.10 an ounce.

On Wednesday, gold prices ended at $1,234.50 an ounce, up $0.10, after some disappointing retail sales data from the U.S., even as most global equity markets ended in the red.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 707.59 tons from its previous close of 707.82 tons.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 92.34 on Thursday, up from its previous close of 92.09 late Wednesday in North American trade. The dollar scaled a high of 92.75 intraday and a low of 91.51.

The euro trended lower against the dollar at $1.1620 on Thursday, as compared to its previous close of $1.1789 late Wednesday in North American trade. The euro scaled a high of $1.1795 intraday and a low of $1.1570.

On the economic front, a report from the Labor Department showed U.S. producer prices to have recorded their biggest drop in over three years in December, with the index for final demand dropping by 0.3 percent in December following a 0.2 percent drop in November. The drop reflected the biggest decline since October 2011, with economists anticipating the index to slide by 0.4 percent.

A report from the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits to have jumped to a four-month high in the week ended January 10. The initial jobless claims climbed to 316,000, an increase of 19,000 from the previous week's revised level of to 297,000. Economists expected jobless claims at 295,000 from the 294,000 originally reported for the previous week.

After reporting an unexpected contraction in regional manufacturing activity in the previous month, the Federal Reserve Bank of New York's report on Thursday showed business activity for New York manufacturers to have expanded in January. The New York Fed's general business conditions index jumped to a positive 10.0 in January from a negative 1.2 in December, with a positive reading indicating growth in regional manufacturing activity. Economists expected the index to climb to a positive 5.0.

Manufacturing activity in the Philadelphia area grew at a notably slower pace in January, a report from the Federal Reserve Bank of Philadelphia showed Thursday. The Philly Fed's diffusion index of current activity tumbled to 6.3 in January from 24.3 in December, hitting its lowest level since last February. Economists expected the index to show a much more modest decrease to 20.0.

Eurozone trade surplus set a new record in November, helped by a marginal growth in exports and stagnant imports, and weaker euro is likely to boost demand for exports going forward. The trade surplus rose to a seasonally adjusted EUR 20 billion from EUR 19.6 billion in October, figures from Eurostat revealed Thursday.

Germany's economy grew the most in three years during 2014 amid record high employment, largely led by domestic demand and investments, and the country recorded a fiscal surplus for the third consecutive year. Gross domestic product grew 1.5 percent, in line with economists' expectations, preliminary data from Destatis showed Thursday. The figure was much better than the modest 0.1 percent growth in 2013.