Gold ends moderately higher but silver continues to slip
Bullion prices ended in a mixed mode on Thursday, 13 March 2014 at Comex. Gold futures on Thursday settled with a modest gain, as a pullback in U.S. equities helped provide some investment appeal for the precious metal. The U.S. dollar index fell to a 4.5-month low overnight, which also is an underlying bullish factor for the precious metals.
Gold for April delivery rose $1.90, or 0.1%, to settle at $1,372.40 an ounce on the Comex division of the New York Mercantile Exchange. Prices tallied their four-straight session gain and held their ground at a six-month closing high. Earlier, prices for the yellow metal earlier had dropped to as low as $1,364.90 when U.S. equities traded higher on the back of a fall in weekly U.S. jobless claims and a rise in monthly retail sales.
May silver continued its descent, closing 16 cents, or 0.8%, lower at $21.20 an ounce.
The Russian troop occupation of Ukraine is a growing concern among many traders and investors. U.S. and European Union leaders are threatening to impose economic and diplomatic sanctions on Russia.The Russian occupation of Crimea has been a bullish factor for the gold market.
In overnight developments, there was another downbeat economic report coming out of China on Thursday. China's industrial output rose by 8.6%, year-on-year, in the January and February period. That's lower than the 9.5% rise that was expected and down from a rise of 9.7% in December. Traders and investors are also a bit concerned about China's credit and financial system, given the recent bond default by a Chinese corporationthe first one ever. Gold has also seen safe-haven buying due to the uncertainty of the aforementioned matters in China.
U.S. economic data released Thursday included the weekly jobless claims report, import and export price indexes, manufacturing and trade inventories, and retail sales. The data had only a marginal impact on market prices.
Retail sales increased 0.3% in February after declining a downwardly revised 0.6% (from -0.4%) in January. The consensus expected retail sales to increase 0.2%. Sales increased in-line with the 0.2% increase in aggregate earnings that were reported in the February employment report.
The initial claims level fell to 315,000 for the week ending 8 March 2014 from an upwardly revised 324,000 (from 323,000) for the week ending 1 March 2014. The consensus expected the initial claims level to increase to 329,000. The DOL reported that there were no special factors that drove the initial claims level to its lowest point since November 2013.
Separately, total business inventories increased 0.4% in January after increasing an unrevised 0.5% in December while the consensus expected an increase of 0.3%. Total inventories consist of manufacturers, merchant wholesalers, and retailers. The important takeaway from the report was that the inventory gain may not have been planned. Total business sales fell 0.9% in January after declining 0.1% in December. That sharp drop in spending caused an overstock situation as more goods than expected were left on shelves.
The Treasury Budget for February showed a deficit of $193.50 billion, which followed the prior month's deficit of $203.50 billion. The consensus expected the deficit to hit $195.00 billion.
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