Gold falls on strong U.S. growth and jobless claims data

Gold falls on strong U.S. growth and jobless claims data

Gold prices fell on Thursday after strong data on U.S. quarterly growth and weekly jobless claims solidified expectations for the Federal Reserve to wind down monthly asset purchases this year and begin hiking benchmark interest rates in 2015, ending years of ultra-loose policies that have bolstered the yellow metal.

Fed asset purchases, currently set at $55 billion a month, weaken the dollar to spur recovery, thus bolstering gold's appeal as a hedge as long as the Fed intervenes.

On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at $1,292.50 a troy ounce during U.S. trading, down 0.84%, up from a session low of $1,291.40 and off a high of $1,307.40. The June contract settled down 0.61% at $1,303.40 on Wednesday.

Futures were likely to find support at $1,265.00 a troy ounce, the low from Feb. 10, and resistance at $1,343.00, the high from March 21. A fresh batch of improving U.S. economic indicators kept expectations firm that the Federal Reserve will wind down monthly asset purchases this year and hike rates the next, which strengthened the dollar on Thursday. Gold and the dollar tend to trade inversely with one another.

The Fed's asset-purchasing program, currently set at $55 billion in Treasury and mortgage debt a month, weakens the dollar by suppressing long-term interest rates to spur investing and hiring, thus boosted gold's appeal as a hedge. The Commerce Department reported earlier that U.S. gross domestic product was revised up to 2.6% in the final three months of 2013, from a preliminary estimate of 2.4%. Market expectations had been for an upward revision to 2.7%. Still, the report showed that personal spending was revised up to 3.3% from 2.6% initially, the fastest rate of growth in three years, which drew applause from investors. Separately, the Labor Department said the number of individuals filing for initial jobless benefits in the U.S. last week declined by 10,000 to a 311,000 from the previous week’s revised total of 321,000. Analysts were expecting jobless claims to rise by 4,000. Thursday's data fueled already growing opinions that a spate of disappointing economic indicators released earlier in the year were the product of rough winter weather and not due to an underlying decline in demand. Investors shrugged off a National Association of Realtors report revealing that its pending home sales index dropped by 0.8% last month, disappointing expectations for a 0.3% gain.

 

NYMEX crude oil prices retain gains in Asia as U.S. data buoys

Crude oil prices gained slightly in Asia on Friday on a carryover from overnight better-than-expected U.S. economic growth and weekly jobless claims data.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in May traded at $101.35 a barrel, up 0.07%. On Thursday it reached the highest settlement price since March 7, after hitting an overnight session low of $100.04 a barrel and a high of $101.69 a barrel. 

Brent oil on the ICE futures exchange rose 80 cents, or 0.8%, to $107.83 a barrel on Thursday, its highest level since March 14. 
Oil prices shot up after the Commerce Department reported earlier that U.S. gross domestic product was revised up to 2.6% in the final three months of 2013, up from a preliminary estimate of 2.4%. Market expectations had been for an upward revision to 2.7%.
Still, the report showed that personal spending was revised up to 3.3% from 2.6% initially, the fastest rate of growth in three years, which drew applause from investors betting that sluggish economic indicators hitting the wire earlier this year were the result of rough winter weather that disrupted commerce and not due to an economic soft patch.
Separately, the Labor Department said the number of individuals filing for initial jobless benefits in the U.S. last week declined by 10,000 to a 311,000 from the previous week’s revised total of 321,000.
Analysts were expecting jobless claims to rise by 4,000.

Natural gas shoots up on bullish U.S. stockpile report

Natural gas futures shot up on Thursday after data revealed Americans demanded more of the commodity last week than expected.

 

On the New York Mercantile Exchange, natural gas futures for delivery in May traded at $4.499 per million British thermal units during U.S. trading, up 2.35%. The commodity hit session high of $4.500 and a low of $4.368. The May contract settled up 0.43% on Wednesday to end at $4.395 per million British thermal units. Natural gas futures were likely to find support at $4.258 per million British thermal units, Monday's low, and resistance at $4.585, the high from March 17. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ending March 21 fell by 57 billion cubic feet, surpassing expectations for a decline of 54 billion cubic feet. Supplies fell by 90 billion cubic feet in the same week a year earlier while the five-year average change for the week is a drop of 7 billion cubic feet. Total U.S. natural gas storage stood at 896 billion cubic feet, the lowest for this time of year since 2003. Stocks were 899 billion cubic feet less than last year at this time and 926 billion cubic feet below the five-year average of 1.822 trillion cubic feet for this time of year.

The report showed that in the East Region, stocks were 419 billion cubic feet below the five-year average, following net withdrawals of 39 billion cubic feet. Stocks in the Producing Region were 378 billion cubic feet below the five-year average of 754 billion cubic feet after a net withdrawal of 15 billion cubic feet.

The numbers sparked a rally, which may be short-lived, as updated long-term weather-forecasting models called for a return of milder temperatures across most parts of the U.S. once a frigid winter system clears out of the eastern U.S. Natural gas prices have been under heavy selling pressure in recent sessions amid concerns that the arrival of spring will bring warmer temperatures throughout the U.S. and cut into demand for heating. The heating season from November through March is the peak demand period for U.S. gas consumption. Approximately 52% of U.S. households use natural gas for heating, according to the Energy Department.

 

Economic Calendar

Time	Cur.	Event	Forecast	Previous
Friday, March 28
15:00	GBP	Business Investment (QoQ)	2.40%	2.40%
15:00	GBP	Current Account	-14.0B	-20.7B
15:00	GBP	GDP (QoQ)	0.70%	0.70%
15:00	GBP	GDP (YoY)	2.70%	2.70%
15:00	GBP	Index of Services	0.60%	0.80%
15:30	EUR	Business and Consumer Survey	101.4	101.2
15:30	EUR	Business Climate	0.4	0.4
15:30	EUR	Consumer Confidence	-13	-12.7
15:30	EUR	Consumer Inflation Expectation		13.6
15:30	EUR	Industrial Sentiment	-3	-3.4
16:30	INR	Indian FX Reserves, USD		297.29B
18:00	USD	Core PCE Price Index (MoM)	0.10%	0.10%
18:00	USD	Personal Income (MoM)	0.20%	0.30%
18:00	USD	Personal Spending (MoM)	0.30%	0.40%
18:00	USD	Real Personal Consumption (MoM)	0.10%	0.30%
19:25	USD	Michigan Consumer Expectations	70.2	69.4
19:25	USD	Michigan Consumer Sentiment	80.5	79.9
19:25	USD	Michigan Current Conditions	96.3	96.1
19:25	USD	Michigan Inflation Expectations		3.20%
20:00	USD	ECRI Weekly Annualized (WoW)		2.30%

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