Gold futures ended higher for a fifth straight session on Monday, further extending gains after closing at a three-month high last week. The uptick comes on the heels of some disappointing economic data from the U.S. with homebuilder confidence dropping more than expected in May, boosting expectations of a further delay in a Federal Reserve interest rate hike.
The view was further strengthened amid some dovish rhetoric from a top official at the Federal Reserve.
“I see no compelling reason for us to be in a hurry to tighten financial conditions until” inflation is rising near the Fed’s two percent target,” Charles Evans, the president of the Chicago Fed, said.
Evans said it would not be appropriate to start raising the Fed funds rate until sometime in early 2016. Inflation has been stubbornly low for years, allowing the Fed to keep interest rates at zero.
Although economic activity appears to be on a solid, sustainable path, supporting a rate hike soon, the weak first quarter data necessitates confirmation that they are indeed a transitory aberration, Evans said at the Swedbank Global Outlook Summit in Stockholm.
Continuing a string of disappointing economic data, homebuilder confidence in the U.S. deteriorated unexpectedly in May, a report from the National Association of Home Builders showed Monday.
Gold for June delivery, the most actively traded contract, moved up $2.30 or 0.2 percent to settle at $1,227.60 an ounce, on the Comex division of the New York Mercantile Exchange on Monday. This is the highest settlement since February 10.
Gold for June delivery scaled an intraday high of $1,232.00 and a low of $1,221.20 an ounce.
On Friday, gold futures inched up $0.10 to settle at $1,225.30 an ounce, on some soft economic data from the U.S. with the dollar continuing to trend lower.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, remained unchanged at 723.91 tons on Monday, from a previous close of 728.32 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 93.99 on Monday, up from its previous close of 93.27 on Friday in late North American trade. The dollar scaled a high of 94.05 intraday and a low of 93.27.
The euro trended lower against the dollar at $1.1339 on Monday, as compared to its previous close of $1.1449 in North American trade late Friday. The euro scaled a high of $1.1449 intraday and a low of $1.1335.
On the economic front, homebuilder confidence in the U.S. deteriorated unexpectedly in May, a report from the National Association of Home Builders on Monday. The NAHB/Wells Fargo Housing Market Index dropped to 54 in May after climbing to 56 in April. Economists expected the housing market index to inch up to a reading of 57.
Reports on housing starts, existing home sales and consumer price inflation are likely to be in focus in the coming days, with investors likely to keep a close watch for minutes of the latest Fed meeting as well as a speech by Fed Chair Janet Yellen.
Meanwhile, German central bank Bundesbank in its monthly report said private consumption is set to drive Germany’s growth in coming months and the construction activity likely will improve, while momentum in the industrial sector is likely to remain sluggish.
In the first quarter, German economic growth eased to 0.3 percent from 0.7 percent in the final three months of 2014.
The material has been provided by InstaForex Company – www.instaforex.com