Gold Ends Higher On Weak Dollar, Soft Data

(RTTNews) - Gold futures snapped a two-day loss to end higher on Wednesday, amid concerns over the global economy and the performance of global stocks, even as the dollar trended lower. Comments from the European Central Bank president over any increase in asset purchases also supported gold prices.

Markets are still expecting an interest rate hike from the Federal Reserve before year's end, even though policy makers have cited global headwinds as a cause for concern last week.

U.S. manufacturing activity in September came in line with its slowest pace of growth in 22 months, a flash reading from Markit showed Wednesday. Meanwhile, Chinese manufacturing activity contracted the most in six-and-a-half years in September, as orders and production declined at faster rates.

Despite the soft U.S. and Chinese manufacturing activity data, comments from European Central Bank President Mario Draghi helped gold find some footing.

The European Central Bank President Mario Draghi on Wednesday said the bank needs more time to determine whether the downside risks to euro area growth calls for an increase in asset purchases.

Draghi, who was speaking at a hearing in the European Parliament in Brussels, said, "More time is needed to determine in particular whether the loss of growth momentum in emerging markets is of a temporary or permanent nature and to assess the driving forces behind the drop in the international price of commodities and behind the recent episodes of severe financial turbulence."

Gold for December delivery, the most actively traded contract, gained $6.70 or 0.6 percent, to settle at $1,131.50 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.

Gold for December delivery scaled an intraday high of $1, 134.00 and a low of $1,121.10 an ounce.

On Tuesday, gold prices for December delivery dropped $8.00 or 0.7 percent, to settle at $1,124.80 an ounce, as the dollar trended higher and investors anticipating a rate hike by the Federal Reserve some time this year.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, moved up to 675.80 tons on Wednesday from its previous close of 674.61 tons on Tuesday.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.19 on Wednesday, down from its previous close of 96.32 in late North American trade on Tuesday. The dollar scaled a high of 96.55 intraday and a low of 96.11.

The euro trended higher against the dollar at 1.1200 on Wednesday, as compared to its previous close of 1.1128 in North American trade late Tuesday. The euro scaled a high of 1.1200 intraday and a low of 1.1105.

On the economic front, U.S. manufacturing activity in September matched its slowest pace of growth in 22 months, the flash reading from the Markit showed Wednesday. The flash PMI came in unchanged at 53.0 last month, the lowest level since October 2013.

Chinese manufacturing activity contracted the most in six-and-a-half years in September, as orders and production declined at faster rates. The flash manufacturing Purchasing Managers' Index fell to 47 in September from 47.3 in August, survey data from Caixin Insight Group and Markit showed Wednesday. This was the lowest score in 78 months and was below the consensus estimate of 47.5.

Data from Markit showed that the flash Eurozone services Purchasing Managers' Index declined to 54 in September from 54.4 in the prior month. It was below the expected score of 54.2. The manufacturing PMI fell to 52, in line with forecast, from 52.3 in August. The composite output index dropped to 53.9 from 54.3 in August. It was expected to fall to 54.

Eurozone private sector growth eased slightly in September but the overall economic growth is expected to be maintained at 0.4 percent in the third quarter underpinned by new orders. The composite output index dropped to 53.9 in September from 54.3 in August, flash data from Markit revealed Wednesday. Nonetheless, it was below the expected score of 54.

Germany's private sector growth slowed slightly in September, flash data from Markit showed Wednesday. The composite output index fell to 54.3 in September from 55 in August.

The French private sector growth improved in September as both manufacturing and services expanded from prior month, flash survey data from Markit showed Wednesday. The flash composite output index rose to 51.4 in September from 50.2 in August. Private sector output expanded for the eighth successive month.

The French economy stalled as estimated in the second quarter, final data from the statistical office Insee showed Wednesday. Gross domestic product remained stable after expanding 0.7 percent in the first quarter and 0.1 percent in the fourth quarter of 2014. The second quarter growth rate came in line with the estimate published on August 14.