Gold dips on profit taking, stronger dollar
Published Feb 20, 2014 02:19PM ET
Investing.com - Gold prices fell on Thursday after investors continued to sell the precious metal for profits, shrugging off a soft regional U.S. output report as a weather-related setback that won't alter monetary policy, which bolstered the dollar.
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Gold and the dollar tend to trade inversely with one another.
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On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at $1,316.90 a troy ounce during U.S. trading, down 0.27%, up from a session low of $1,307.70 and off a high of $1,317.50.
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The April contract settled down 0.30% at $1,320.40 on Wednesday.
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Futures were likely to find support at $1,265.00 a troy ounce, the low from Feb. 10, and resistance at $1,332.20, Monday' high.
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Gold prices have risen in recent weeks due to soft jobs, manufacturing and other economic indicators that prompted many investors to speculate that the Federal Reserve may slow the pace at which it tapers its asset-buying stimulus program.
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The Fed is currently buying $65 billion in bonds a month to suppress interest rates to spur recovery, which weakens the dollar as a side effect, thus bolstering gold's image as a hedge.
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On Wednesday, the Federal Reserve released the minutes of its January policy meeting that revealed most monetary authorities felt monthly bond purchases will continue tapering as the year unfolds, which boosted the dollar on Thursday.
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Data out of the U.S. failed to seriously cap the greenback's advance, as speculation remained strong that the Federal Reserve will continue dismantling its dollar-weakening stimulus tools.
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The Federal Reserve Bank of Philadelphia said that its manufacturing index deteriorated to minus 6.3 in February from January’s reading of 9.4. Analysts had expected the index to inch down to 8.0 in February, though investors viewed the numbers as a hiccup in recovery and likely the product or rough winter weather after digesting the report.
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Also in the trading session, the Department of Labor said the number of individuals filing for unemployment assistance in the U.S. last week fell by 3,000 to 336,000, slightly below expectations for a decline of 4,000.
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In a separate report, the Labor Department said U.S. consumer prices rose 1.6% on a year-over-year basis in January, in line with forecasts. Consumer prices were 0.1% higher from a month earlier, also matching forecasts.
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Core consumer prices, which are stripped of volatile food and energy components, were also up 1.6% on a year-over-year basis and 0.1% from the previous month.
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Meanwhile, silver for March delivery was down 0.79% and trading at US$21.678 a troy ounce, while copper futures for March delivery were down 0.18% at US$3.280 a pound.
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Written By: Investing.com
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