Gold futures ended lower on Thursday, with investors opting for the riskier equity assets after global markets rebounded following yesterday’s massive sell-off. The drop in prices come despite renewed hopes the Federal Reserve will keep interest rates at zero this year.
With concerns about Greece seeping in, minutes from the Fed’s most recent meeting showed policy makers to be in no hurry to raise interest rates. Greek Prime Minister Alexis Tsipras told the European parliament that he would submit a detailed reform plan to the eurozone later today.
Chinese stock markets rallied today after some brutal losses as authorities brought in another raft of unorthodox measures such as banning major shareholder selling for the next six months.
China’s central bank also said it would provide sufficient liquidity to China Securities Finance Corp., the state-backed margin finance company. Additionally, the China Banking Regulatory Commission said it would encourage banks to support companies’ share buybacks by offering them collateralized loans.
In some disappointing economic news, first-time claims for U.S. unemployment benefits unexpectedly showed another increase in the week ended July 4, a report from the Labor Department showed Thursday, with claims reaching their highest level in over four months.
Gold for August delivery, the most actively traded contract, dropped $4.30 or 0.4 percent, to settle at $1,159.20 an ounce, on the Comex division of the New York Mercantile Exchange on Thursday.
Gold for August delivery scaled an intraday high of $1,166.90 and a low of $1,155.10 an ounce.
On Wednesday, gold prices gained $10.90 or 1.0 percent, to settle at $1,163.50 an ounce, after the dollar weakened and global equity markets declined, even as talks between Greece and the Eurogroup appeared to be in a limbo, making little progress.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, edged lower to 709.37 tons on Thursday, from its previous close of 709.65 tons.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 96.73 on Thursday, up from its previous close of 96.22 on Wednesday in late North American trade. The dollar scaled a high of 96.76 intraday and a low of 95.97.
The euro trended lower against the dollar at $1.1000 on Thursday, as compared to its previous close of $1.1076 in North American trade late Wednesday. The euro scaled a high of $1.1125 intraday and a low of $1.0993.
In economic news, a Labor Department report showed initial jobless claims to have climbed to 297,000, an increase of 15,000 from the previous week’s revised level of 282,000. Economists expected jobless claims to dip to 276,000 from the 281,000 originally reported for the previous week.
China’s inflation increased more than expected in June as both food and non-food prices moved higher, while producer prices continued its downward trend. Consumer prices increased 1.4 percent year-on-year in June after rising 1.2 percent in May, the National Bureau of Statistics said Thursday. Inflation was expected to rise marginally to 1.3 percent.
Eurozone house prices increased in the first quarter after a drop in the prior quarter, preliminary figures from Eurostat showed Thursday. House prices rose 0.3 percent quarter-on-quarter in the three-month period to March, in contrast to a 0.6 percent decrease in the previous three months.
Germany’s exports grew unexpectedly in May, taking the trade surplus to a record high, data from Destatis revealed Thursday. Exports rose 1.7 percent from the prior month, confounding expectations for a 0.8 percent fall. It was the fastest growth since December, when it grew 2.9 percent. In April, exports had climbed 1.6 percent.
At the same time, German imports rebounded in May, up 0.4 percent versus a 0.8 percent drop in April. Economists had expected a 0.1 percent gain. As a result, the trade surplus increased to a record EUR 22.8 billion from a revised EUR 21.5 billion in April.
British house prices increased at the fastest pace in eleven months in June, the latest survey from the Royal Institution of Chartered Surveyors showed on Thursday. The survey showed that monthly house price balance climbed to +40 in June from +34 in May, while it was expected to increase slightly to +36. It was the biggest rate of growth since July 2014.
The International Monetary Fund lowered its global growth forecast for the year, due to an unexpected decline in output in the United States and warned that uncertainty in Greece and re-balancing in China pose risks to the outlook.
In the July update to its World Economic Outlook, released Thursday, the Washington-based lender forecast 3.3 percent global growth for this year, which is smaller than the 3.5 percent predicted in April. The global growth projection for next year, however, was maintained at 3.8 percent. Global growth was 3.4 percent in 2014 and 2.2 percent in the first quarter of this year, the report said.
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