Gold futures drop for the fifth session in six
Gold prices ended the U.S. day session solidly lower on Thursday, 05 September 2013 at Comex. Prices were pressured by some better-than-expected U.S. economic data released during the day. The U.S. dollar index rallied sharply in the wake of Thursday's generally upbeat U.S. data, which also helped to put downside price pressure on the precious metals markets.
December gold brushed a session high of $1400.00 per ounce at pit trade open but quickly slipped into negative territory. Unable to gain much momentum, it settled 1.3% lower at $1372.50 per ounce. Gold futures dropped on Thursday for the fifth session in six, pressured by strength in the dollar after upbeat U.S. economic data as investors mulled progress toward a U.S. military strike in Syria.
December silver also retreated into the red after trading as high as $23.65 per ounce in early morning floor action. It managed to inch higher off of its session low of $23.04 and trimmed losses to 0.8% as it closed at $23.25 per ounce.
This morning was busy in terms of economic data. The ADP Employment Change report estimates 176,000 private sector jobs were created in August. That was pretty much in-line with expectations, but down slightly from the 198,000 created in July.
Initial claims for the week ending August 31 dropped by 9,000 to 323,000 (consensus 333,000). That brought the 4-week moving average for this series to 328,500, which is the lowest level since October 2007. Continuing claims for the week ending August 24 fell by 43,000 to 2.951 million (consensus 2.977 million). That lowered the 4-week moving average by 18,000 to 2.98 million.
Second quarter productivity was revised up to 2.3% from 0.9% while unit labor costs were revised down to 0.0% from 1.4%. The revisions reflect the improved output in the second quarter and the understanding that corporate profits continue to be helped by labor costs being held in check.
The August ISM Non-manufacturing Index jumped to 58.6 from 56.0. The consensus expected the index to fall to 54.5. The index is at its highest point since it was reformulated in January 2008.
Factory orders fell 2.4% in July after increasing an upwardly revised 1.6% (from 1.5%) in June. The consensus expected factory orders to fall 3.7%. Durable goods orders were revised down modestly from -7.3% in the advance release to -7.4%. The underlying trends were essentially unchanged from the advance report. As expected, most of the decline in durable goods orders came from a 19.4% drop in transportation orders. Orders of defense and nondefense aircraft fell an unrevised 44.3%.
The dollar index, which weighs the strength of the dollar against a basket of six otehr currencies, rose by 0.5% on Thursday.
Overnight, the Bank Japan kept its monetary policy steady at Thursday's meeting, which was expected. The Bank of England and European Central Bank also held their monthly monetary policy meetings on Thursday. Both kept their policies unchanged, as expected. Also, Thursday marked the beginning of the G-20 political and finance ministers meeting in Russia. The U.S., Russia and China could square off at this meeting, regarding U.S. efforts to use military force against Syria.
The big economic news of the week and of the month will be Friday morning's U.S. jobs report. Many market watchers believe Friday's jobs data will tip the Federal Reserve's hand on when the tapering of U.S. monetary policy will begin. Forecasts call for the key U.S. non-farm jobs number to come in at up 175,000 in August. The overall unemployment rate is expected to be unchanged from July, at 7.4%.
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