Gold Ends Higher On Weak U.S. Data

(RTTNews) - Gold futures snapped a two-day loss to end slightly higher on Thursday, as the dollar weakened against some select currencies after some disappointing economic data from the U.S. with retail sales dropping more than expected in January and first-time unemployment benefit claims rising more than anticipated last week.

Meanwhile, the Bank of England on Thursday warned of U.K. deflation but signaled it will soon hike interest rates.

"Output growth remains solid and domestic demand growth robust," Bank of England Governor Mark Carney said. Deflation brought on by collapsing energy prices is temporary and "the most likely next move in monetary policy is an increase in interest rates," he added.

With the Federal Reserve also expected to raise interest rates and inflation well in check in the U.S., gold prices have fallen sharply this month.

The precious metal found support after a Commerce Department report showed U.S. retail sales to have dropped more than anticipated in January as sales at gas stations declined substantially. Meanwhile, first-time claims for unemployment benefits in the U.S. unexpectedly climbed back above the 300,000 level in the week ended February 7, continuing to rebound from a recent pullback.

Nevertheless, the gains were capped after Russia and Ukraine reached a ceasefire agreement in Minsk, which was later confirmed by Russian President Vladimir Putin. The ceasefire agreement starting on February 15 was reached with the active involvement of French and German leaders in several hours of talks.

Gold for April delivery, the most actively traded contract, gained $1.10 or 0.1 percent to settle at $1,220.70 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

Gold for April delivery scaled an intraday high of $1,232.80 and a low of $1,218.00 an ounce.

On Wednesday, gold ended at $1,219.60 an ounce, down $12.60 or 1.0 percent, on a weak dollar and as hopes of a deal between Greece and its EU partners showed no signs of progress, fueling concerns about the fate of the eurozone.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 773.31 tons on Thursday from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 94.28 on Thursday, down from its previous close of 94.93 late Wednesday in North American trade. The dollar scaled a high of 94.97 intraday and a low of 93.98.

The euro trended higher against the dollar at $1.1390 on Thursday, as compared to its previous close of $1.1334 late Wednesday in North American trade. The euro scaled a high of $1.1424 intraday and a low of $1.1305.

On the economic front, first-time claims for U.S. unemployment benefits unexpectedly climbed back above the 300,000 level in the week ended February 7, continuing to rebound from a recent pullback. A Labor Department report on Thursday showed initial jobless claims to have climbed to 304,000, an increase of 25,000 from the previous week's revised level of 279,000. Economists expected jobless claims to rise to 288,000 from the 278,000 originally reported for the previous week.

With sales at gas stations showing another substantial decrease, a Commerce Department report revealed U.S. retail sales to have dropped more than anticipated in January. Retail sales fell 0.8 percent in January after slumping by 0.9 percent in December. Economists expected sales to drop by 0.5 percent.

Eurozone industrial production remained flat in December after expanding for three consecutive months, data from Eurostat revealed Thursday. Industrial production remained unchanged from November, while it was forecast to grow 0.2 percent. The growth rate for November was revised down to 0.1 percent from 0.2 percent.

Germany's consumer prices fell for the first time since September 2009 in January and at a faster than initially estimated pace, final data from Destatis showed Thursday. The consumer price index dropped 0.4 percent in January from last year, while it was estimated to fall by 0.3 percent. This was the first drop since September 2009 and the biggest decline since July 2009, when prices slid 0.5 percent.

Business inventories in the U.S. increased in December due partly to a rebound in retail inventories, although business sales showed a notable decrease, a Commerce Department report indicated Thursday. Business inventories inched up 0.1 percent in December after edging up 0.2 percent in November. Economists anticipated another 0.2 percent increase.

Meanwhile, business sales slumped by 0.9 percent in December after sliding 0.4 percent in November. Wholesale inventories edged up 0.1 percent in December after climbing 0.8 percent in November, while manufacturers' inventories dipped by 0.3 percent after coming in unchanged in the previous month.