Gold futures ended lower on Wednesday, as investors opted for the riskier equity assets after some upbeat data from the U.S. with initial claims for unemployment benefits declining more than expected. The better than expected U.S. gross domestic product growth in the third quarter yesterday also weighed down the yellow metal.
Fairly steady global equity markets and speculation about U.S. interest rate hikes curbed demand for the precious metal.
In some upbeat economic news, first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended December 20, a report from the Labor Department showed Wednesday.
Yesterday, a Commerce Department report showed U.S. gross domestic product to have increased much more than previously estimated in the third quarter, reflecting notably stronger consumer spending growth.
Gold for February delivery, the most actively traded contract, dropped $4.50 or about 0.4 percent to settle at $1,173.50 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday.
Gold for February delivery scaled an intraday high of $1,181.20 and a low of $1,172.70 an ounce.
On Tuesday, gold futures ended lower at $1,178.00 an ounce, down $1.80 or 0.2 percent, after a final reading showed U.S. economy to have grown more than expected in the third quarter, with the dollar also strengthening against a basket of major currencies.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down to 712.90 tons on Wednesday, from its earlier close of 724.55 tons on Tuesday.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 89.96 on Wednesday, down from its previous close of 90.07 late Tuesday in North American trade. The dollar scaled a high of 90.08 intraday and a low of 89.81.
The euro trended higher against the dollar at $1.2193 on Wednesday, as compared to its previous close of $1.2172 late Tuesday in North American trade. The euro scaled a high of $1.2225 intraday and a low of $1.2170.
In economic news, a report from the U.S. Labor Department showed initial jobless claims to have declined to a seven-week low of 280,000 in the week ended December 20, down 9,000 from preceding week. Economists had expected claims to fall to 287,500 last week.
However, continuing claims were up more than expected in the week ended December 13, coming in at 2,403,000, up from a revised 2,378,000 in the preceding week and higher than an expected figure of 2,380,000.
British labor productivity improved during three months to September for the first time since the second quarter of 2013, data from the Office for National Statistics showed Wednesday. Output per hour increased 0.6 percent sequentially in the third quarter, after staying flat a quarter ago. This was the first expansion since the second quarter of 2013. Productivity rose 0.3 percent from the same period of last year, the first increase this year, following a 0.6 percent fall in the second quarter.
Standard & Poor's Ratings Services said it may downgrade the sovereign rating of Russia due to the rapid deterioration in monetary flexibility and the impact of the weakening economy on the financial system. Currently, Russia has ‘BBB-‘ rating, the lowest investment grade. The rating agency placed the ‘BBB-/A-3' sovereign ratings on Russia on CreditWatch with negative implications.
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