A sharp rise in the dollar pulled gold down yesterday, even as oil prices climbed to another record high.
International spot gold traded in the range $946.35 - $926.70 and last quoted at $932.85 ($944.35).
In a widely expected decision, the European Central Bank raised its key interest rate by 25 basis points to 4.25 percent.
The unemployment rate in US remained at a four-year high of 5.5% in June, according to the release by the Labor Department. At the same time, US payrolls in June fell by 62,000. The payrolls have now declined in all six months this year for a total job loss of 438,000.
Indicating better-than-expected manufacturing activity in the US, the Institute for Supply Management’s factory index had risen to 50.2% in June from 49.6% in May.
The dollar had declined for continuous days since the Federal Reserve left interest rates unchanged at 2 %, as economic fears persisted amid mixed data from various sectors and upside risks to inflation.
Initial claims for US state unemployment benefits were unchanged at 384,000 in the week ending June 21, the Labor Department reported last week. But the four-week average of those claims rose to 378,250.
The National Association of Realtors reported last week that sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May.
But the sale of new US single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000, according to the Commerce Department. Compared with a year earlier, the new-home sales were down 40.3%.
Meanwhile, the US Commerce Department in its final revision to GDP estimates said last week that the economy grew at a slightly faster pace in the first quarter than originally reported. Real GDP was revised to a 1.0% annual rate in the first three months of the year, up from an originally reported reading of 0.9%.
The US Consumer Confidence fell in June to a 16-year low. According to Conference Board, June consumer confidence index fell to 50.4 from a reading of 58.1 in May.
The US trade deficit had widened 7.8% in April to a seasonally adjusted $60.9 billion from $56.5 billion in March, according to the report by US Commerce Department. The growing deficit was driven by a surge in crude oil imports, which eclipsed a significant gain in the nation’s exports.
The recent data from various sectors in the US have given rather mixed hints regarding the economy.
Official data that showed a 10.1 percent decrease in South Africa’s gold production in April 2008, compared to the corresponding month in the previous year, supported the bullion.
Oil prices extended gains and recorded a fresh all-time high above $145 a barrel, underpinned by short-term supply concerns due to geo-political tensions in the Middle East and Nigeria and a drop in US crude inventories.
Weekly Outlook (Spot Gold)
Continuation of uptrend is expected above $932. Supports are $922, $913; resistances $945, $954.
Last day DGCX Gold Aug traded in the range $948.30 – $928.80 and closed at $934.70 ($947.00).
TECHNICAL OUTLOOK (Intra-day)
GOLD (Aug) - Bullish above $ 939; bearish below $ 934
