Gold futures dropped for a fifth straight session on Thursday, amid rising speculation of a Federal Reserve rate hike ahead of the U.S. jobs data for September tomorrow.. The precious metal ended slightly lower despite a weak dollar, on concerns over demand growth after some disappointing manufacturing activity data from China and the U.S.
With yesterdays upbeat private sector jobs, the Fed would likely respond to encouraging data on the U.S. jobs market by tightening before year’s end. However, the focus will now be on Friday’s employment data, which would likely set the tone for the Federal Reserve.
A Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits to have increased more than expected in the week ended September 26. Meanwhile, a report from the Institute for Supply Management on Thursday showed its activity in the U.S. manufacturing sector to have dropped to a two-year low in September, partly reflecting concerns about the global economy and customer confidence.
China’s manufacturing conditions deteriorated the most in six-and-a-half years in September as orders declined sharply on weak foreign demand, results of a private sector survey revealed Thursday.
Nevertheless, geopolitical concerns provided gold with some support amid demand for safe haven assets.
Gold for December delivery, the most actively traded contract, dropped $1.50 or 0.1 percent, to settle at $1,113.70 an ounce, on the Comex division of the New York Mercantile Exchange Thursday.
Gold for December delivery scaled an intraday high of $1,118.50 and a low of $1,110.30 an ounce.
On Wednesday, gold prices for December delivery dropped $11.60 or 1.0 percent, to settle at $1,115.20 an ounce, after some upbeat economic data from the U.S. with private sector jobs rising more than expected in September, and the dollar trending higher.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 687.42 tons on Thursday from its previous close of 684.14 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.10 on Thursday, down from its previous close of 96.28 in late North American trade on Wednesday. The dollar scaled a high of 96.49 intraday and a low of 95.97.
The euro trended higher against the dollar at 1.1194 on Thursday, as compared to its previous close of 1.1178 in North American trade late Wednesday. The euro scaled a high of 1.1210 intraday and a low of 1.1136.
On the economic front, a Labor Department report on Thursday showed first-time claims for U.S. unemployment benefits climbed to 277,000, an increase of 10,000 from the previous week’s unrevised level of 267,000. Economists expected jobless claims to edge up to 271,000.
A report from the Institute for Supply Management on Thursday showed its activity in the U.S. manufacturing sector to have dropped to a two-year low in September, partly reflecting concerns about the global economy and customer confidence.
The ISM’s purchasing managers index dropped to 50.2 in September from 51.1 in August, although a reading above 50 indicates growth in the sector. Economists expected the index to dip to 50.5. With the bigger than expected decrease, the manufacturing index fell to its lowest level since hitting 50.1 in May of 2013.
Construction spending in the U.S. increased by slightly more than expected in August, a report from the Commerce Department showed Thursday. Construction spending climbed 0.7 percent to an annual rate of $1.086 trillion in August from the revised July estimate of $1.079 trillion. Economists expected spending to rise by 0.6 percent.
China’s manufacturing conditions deteriorated the most in six-and-a-half years in September as orders declined sharply on weak foreign demand, results of a private sector survey revealed Thursday.
The final manufacturing Purchasing Managers’ Index for China dropped to 47.2 in September from 47.3 in August, data from the Caixin Insight Group and Markit showed. That was the lowest reading since March 2009. The health of the sector has weakened in each of the past seven months. The final reading was above the flash score of 47.
Meanwhile, the official manufacturing PMI rose moderately to 49.8 in September from 49.7 in August, reflecting marginal improvement in production and new orders.
Eurozone manufacturing activity grew at a slower pace as estimated in September, final data from Markit showed Thursday. The manufacturing Purchasing Managers’ Index fell to a five-month low of 52 in September from 52.3 in August. The reading came in line with flash estimate.
Germany’s manufacturing sector expanded less than initially estimated in September, survey data from Markit showed Thursday. The final Markit/BME manufacturing Purchasing Managers’ Index dropped to 52.3 in September from 53.3 in August. The flash score was 52.5.
The French manufacturing sector returned to growth at a faster than estimated pace in September, final data from Markit showed Thursday. The manufacturing Purchasing Managers’ Index came in at 50.6, up from 48.3 in August. It was above the flash estimate of 50.4.
British factory activity expanded at the weakest pace in three months in September, suggesting minimal support to the economy from manufacturing. The seasonally adjusted Purchasing Managers’ Index fell slightly to 51.5 in September from 51.6 in August, which was revised up from 51.5, survey figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Thursday. Economists had forecast the index to fall to 51.3.
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