Strong dollar pushed prices down
Bullion metals fell on Tuesday, 05 November 2013 at Comex with gold settling at their lowest level in nearly three weeks on the back of a stronger U.S. dollar. Gold prices ended the U.S. day session moderately lower on Tuesday and gave up slight gains scored just after the futures market opened in New York.
Gold for December delivery fell $6.60, or 0.5%, to settle at $1,308.10 an ounce on the Comex division of the New York Mercantile Exchange.
December silver inched down by 6 cents, or 0.3%, to $21.64 an ounce, extending its 0.6% loss from Monday.
Economic news out of China overnight showed its services PMI rose to 52.6 in October from 52.4 the previous month. This continues a string of mostly upbeat economic data coming out of China the past few months.
In the European Union, the bloc's producer price index fell at the fastest annual rate in three years, it was reported on Tuesday. EU producer prices rose 0.1% in August, month-on-month, but were down 0.9% on the year. Tuesday's EU inflation numbers, combined with similar figures released last week, are worrisome as they suggest deflationary conditions could be on the horizon for the EU.
Reports on Tuesday said consumer demand for physical gold in India was only half of normal heading up to the key Diwali festival. Added Indian government taxes and other import hurdles crimped consumer demand in this major gold-consuming nation.
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At Wall Street, today's data was limited to the October ISM Services Index, which climbed to 55.4 from 54.4 (consensus). The strength in the services sector is not a surprise. Recent employment reports have shown an uptick in services hiring; moreover, October marks the 46th consecutive month in which economic activity in the non-manufacturing sector has expanded.
Business activity strengthened in October, with the series index rising to 59.7 from 55.1. The new orders index showed continued expansion with a print of 56.8, yet that was the second straight month in which new orders activity decelerated. The aforementioned index was at 60.5 in August and 59.6 in September.
The dollar index, which weighs the strength of the dollar against the basket of six other currencies, rose by 0.3% on Tuesday.
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