Gold Ends Higher On Soft Data, China Bank Move

(RTTNews) - Gold futures ended higher Wednesday, after some disappointing economic data from the U.S. with the ADP private sector employment rising less than expected and on China central bank decision to cut the reserve-requirement ratio for banks in an attempt to spur economic growth.

The disappointing private sector employment data from ADP also raise concerns over the employment report due Friday, which includes both public and private sector jobs.

Investors also continue to monitor the developments in Greece, with Finance Minister Yanis Varoufakis in an interview indicated that his government has started negotiations with the International Monetary Fund over a plan to lessen the burden of the country's hefty debt burden.

China on Wednesday lowered the minimum requirement of deposits banks need to hold as reserves to 19.5 percent from 20.0 percent. The move is seen as an attempt boost economic activity in the world's second largest economy, where sluggishness have been noted from recent critical economic data.

Easy monetary policy from central banks in Europe and Asia have put a floor under gold prices as the U.S. Federal Reserve mulls its imminent interest rate.

Gold for April delivery, the most actively traded contract, gained $4.20 or 0.3 percent to settle at $1,264.50 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for April delivery scaled an intraday high of $1,273.30 and a low of $1,256.90 an ounce.

On Tuesday, gold ended at $1,260.30 an ounce, down $16.60 or 1.3 percent, after some soft economic data from the U.S. showed the economy may be losing some steam.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 764.94 tons on Wednesday from its previous close of 766.73 tons on Tuesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.03 on Wednesday, up from its previous close of 93.75 late Tuesday in North American trade. The dollar scaled a high of 94.10 intraday and a low of 93.61.

The euro trended lower against the dollar at $1.1418 on Wednesday, as compared to its previous close of $1.1479 late Tuesday in North American trade. The euro scaled a high of $1.1486 intraday and a low of $1.1401.

In economic news from the U.S., private sector employment in the U.S. rose less than expected in January, a report from payroll processor ADP showed Wednesday. ADP said private sector employment increased by 213,000 jobs in January following an upwardly revised increase of 253,000 jobs in December. Economists had expected employment to climb by about 223,000 jobs compared to the addition of 241,000 jobs originally reported for the previous month.

After reporting a notable slowdown in the pace of growth in U.S. service sector activity in the previous month, the Institute for Supply Management's report on Wednesday showed a modest uptick to its index of activity in the sector in January.

The ISM said its non-manufacturing index inched up to 56.7 in January from an upwardly revised 56.5 in December, with a reading above 50 indicating growth in the service sector. Economists had expected the non-manufacturing index to edge up to 56.5 from the 56.2 originally reported for the previous month.

China's service sector expansion slowed in January, figures from Markit Economics and HSBC Bank showed Wednesday. The services business activity index fell to 51.8 in January from 53.4 in December. This marked the slowest expansion rate in six months.

Eurozone retail sales grew 0.3 percent in December from the previous month, slower than November's 0.7 percent increase, Eurostat figures showed. Nonetheless, this was the third consecutive rise in sales.

The Eurozone private sector expanded at the fastest pace since July last year as output expanded in Germany, Italy and Spain. But the downturn in the French economy extended into its ninth month. The final composite output index rose to 52.6 in January from 51.4 in December. It was also above the flash reading of 52.2.

Germany's service sector activity growth accelerated at the beginning of 2015 amid rising new business, survey data from Markit Economics showed Wednesday. The final services Purchasing Managers' Index climbed to 54 in January from 52.1 in December. The flash score was 52.7.

The French service sector fell back into negative territory in January, reversing a marginal growth in the prior month, final data from Markit showed Wednesday. The services PMI fell to 49.4 from 50.6 in December. It stayed also below the flash score of 49.5.

The U.K. service sector expanded more than expected in January as new business rose at a faster pace, survey data from Markit showed Wednesday. The Markit/Chartered Institute of Purchasing & Supply Purchasing Managers' Index rose to 57.2 in January from 55.8 in December. The score was forecast to rise to 56.3.