Recent sharp rebound in the value of the U.S. dollar pressure prices
Yellow metal prices ended the U.S. day session modestly lower on Tuesday, 13 May 2014. Gold got an early lift from a U.S. retail sales report that showed only tepid growth and did not meet market expectations. However, the modest gains were eroded by the recent sharp rebound in the value of the U.S. dollar against the Euro currency.
Gold for June delivery fell $1, or 0.1%, to $1,294.80 an ounce on the Comex division of the New York Mercantile Exchange.
July silver ended at $19.55 an ounce, up less than half a cent.
In overnight news, the closely watched German ZEW economic expectations index was released Tuesday and saw confidence decline in May for the fifth month in a row, at 33.1 versus 43.2 in April. The German Bundesbank on Tuesday threw its support behind a likely upcoming move by the European Central Bank to ease its monetary policy. The Bundesbank is very worried about price deflation in the European Union. That news helped to sink the Euro currency and in turn boost the U.S. dollar index.
The Russia-Ukraine situation has not changed much recently, as the market place views it. While tensions are still high in the region, traders and investors have become lackadaisical on the matter. Such is evident by rallying world stock markets, including U.S. indexes hitting all-time highs on Monday.
In other news, the Organization for Economic Cooperation and Development (OECD) reported China's economic growth rate will continue to slow in the coming months, while other countries' economies will see steady growth. Meantime, China's industrial output grew by 8.7% in April, year-on-year, but was below expectations.
At Wall Street, economic data showed that retail sales increased 0.1% in April after increasing an upwardly revised 1.5% (from 1.2%) in March. The consensus expected retail sales to increase 0.3%. Expectations of strong GDP growth in the second quarter were predicated on the unleashing of pent-up demand from weather-related delays. The April Employment report showcased a 0.2% increase in aggregate earnings, which translated into a 0.1% increase in retail sales. Excluding transportation, retail sales were flat after increasing an upwardly revised 1.0% (from 0.7%) in March. The consensus expected these sales to increase 0.6%.
Export prices, excluding agriculture, fell 1.2% in March after increasing 0.8% in the prior reading. Excluding oil, import prices were unchanged, which followed last month's uptick of 0.3%.
Separately, Business inventories increased 0.4% in March after increasing an upwardly revised 0.5% (from 0.4%) in February. The consensus expected business inventories to increase 0.4%.
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