Gold Ends Lower On Rate Hike Worries; Sheds 1.6% For Week

(RTTNews) - Gold futures ended lower on Friday, after some better than expected inflation data lifted the prospects of an immediate rate hike at the Federal Reserve's Federal Open Market Committee meet next week.

For the week, gold prices dropped about 1.6 percent.

The uncertainty of a rate continued to bug markets after some mixed economic data in the last few weeks, although many analysts expect the Fed would hesitate on an immediate hike considering the health of the global economy.

However, analysts believe it unlikely the Federal Reserve is going to raise interest rates next week unless it sees some signs of sustainable inflation.

A Labor Department report on Thursday showed U.S. producer prices for August to have come in flat, with a drop in energy prices offset by continued increase in service prices.

Meanwhile, consumer sentiment in the U.S. deteriorated significantly early September, a preliminary report from the University of Michigan showed.

Gold for December delivery, the most actively traded contract, dropped $6.00 or 0.5 percent, to settle at $1,103.30 an ounce, on the Comex division of the New York Mercantile Exchange on Friday.

Gold for December delivery scaled an intraday high of $1,111.90 and a low of $1,197.70 an ounce.

On Wednesday, gold prices for December delivery gained $7.30 or 0.7 percent, to settle at $1,109.30 an ounce, as the dollar weakened and with focus on the Federal Reserve policy meet next week.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, remained unchanged at 672.18 tons from its previous close.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.16 on Friday, down from its previous close of 95.50 in late North American trade on Thursday. The dollar scaled a high of 95.69 intraday and a low of 95.14.

The euro trended higher against the dollar at 1.1346 on Friday, as compared to its previous close of 1.1281 in North American trade late Thursday. The euro scaled a high of 1.1350 intraday and a low of 1.1255.

On the economic front, a Labor Department report on Thursday showed U.S. producer prices to have come in flat in August, with the index for final demand unchanged in August after rising by 0.2 percent in July. Economists expected the index to edge down by 0.1 percent.

Consumer sentiment in the U.S. deteriorated significantly, with the index tumbling to 85.7 in September from the final August reading of 91.9, a preliminary report from the University of Michigan showed. Economists expected the index to decline modestly to 91.0.

German consumer price inflation remained stable as initially estimated in August, final data from Destatis showed Friday. The consumer price index rose 0.2 percent year-on-year, the same as in July. The rate matched the preliminary estimate published on August 28. The measure climbed for a seventh month running.

Germany's wholesale prices declined at a faster pace in August, figures from Destatis showed Friday. Wholesale prices dropped 1.1 percent year-over-year in August, following a 0.5 percent stable rate of decrease in the previous month. The wholesale price index has been falling since July 2013.

The French current account balance turned to deficit in July largely due to the decline in surplus on services, the Bank of France showed Friday. The current account deficit totaled EUR 0.4 billion in July compared to a surplus of EUR 0.8 billion in June.

U.K. construction output decreased unexpectedly in July after recovering in the previous month, figures from the Office for National Statistics showed Friday. The volume of construction output fell a seasonally adjusted 1.0 percent month-over-month in July, reversing a 0.9 percent increase in June. Economists had expected a 0.5 percent climb for the month.

Japan's business survey index of large manufacturers turned positive in the three months ended September, while future situation is expected to weaken, a quarterly survey by the Ministry of Finance and the Cabinet office showed Friday. The Business Survey Index turned to a positive reading of 11.0 in the three-month period to September from -6.0 in the previous three months.