Weak U.S. economic data pressure the greenback
Bullion metal prices ended moderately higher on Wednesday, 05 June 2013. Some weak U.S. economic data pressured the greenback and in turn helped push gold prices a bit north. Traders and investors are more eagerly awaiting major monthly data when the European Central Bank holds its monthly meeting on Thursday, followed by Friday's U.S. employment report.
Gold for August delivery ended higher by $1.3 (0.1%) at $1,398.5 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
July silver ended higher by $0.06 cents (0.3%) at $22.47 an ounce on Wednesday.
The gold market pushed to its daily high in morning trading Wednesday when the U.S. ADP national employment report showed a weaker jobs-growth reading than the market place expected. The U.S. dollar index fell to its daily low following that report.
The afternoon release of the Federal Reserve's beige book contained no surprises and the market place reacted little to the results.
Euro zone economic data released Wednesday continued to show weakness, which put downside pressure on the Euro currency. Retail sales fell by 0.5% in April and were down 1.1% year-on-year. The Markit data company reported its reading on manufacturing and service sectors was 47.7 in May from 46.9 in April. Any reading below 50.0 signals contraction.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.2%.
Regarding economic data expected at Wall Street, economic data was plentiful. Factory orders rose 1.0% in April after declining an upwardly revised 4.7% (from 4.9%) in March. The consensus expected orders to increase 1.6%. Overall, the report was not too different from expectations. Durable goods growth was strong on solid demand from just about every sector. Some of those gains, however, were offset by falling nondurable goods prices.
While the manufacturing industry slipped into a contraction in May, the services sector managed its 41st consecutive monthly expansion. The ISM Non-manufacturing Index improved slightly in May, increasing from 53.1 in April to 53.7. The consensus expected the index to increase to 53.5.
Nonfarm business productivity increased 0.5% in Q1 2012. That was down from an originally reported 0.7% gain and exactly in-line with the consensus. The big surprise was that unit labor costs now show a 4.3% decline in the first quarter after originally reporting a 0.5% increase. The consensus expected unit labor costs to be revised up to 0.6%.
Firms not only stretched their workforce by increasing their hours in the first quarter (1.6%), but they cut their hourly pay by 3.8%. Essentially, firms were able to produce more, pay less, and reap higher profits.
At the MCX, gold prices for June delivery closed higher by Rs 592 (2.2%) at Rs 27,684 per ten grams. Prices rose to a high of Rs 27,847 per 10 grams and fell to a low of Rs 27,084 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed higher by Rs 465 (1.1%) at Rs 44,228/Kg. Prices opened at Rs 43,820/kg and rose to a high of Rs 44,592/Kg during the day's trading.
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