Gold futures trade close to record high after U.S. data

Forexpros – Gold futures held on to gains on Thursday, hovering close to the record high following a flurry of U.S. economic data, while investors awaited the second part of Federal Reserve Chairman Ben Bernanke’s testimony on monetary policy in Washington.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,590.85 a troy ounce during U.S. morning trade, gaining 0.6%.                

It earlier rose as much as 0.82% to trade at a record high USD1,594.85 a troy ounce, eclipsing the previous day’s all-time high of USD1,587.75 a troy ounce.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending July 8 declined by 22,000 to a seasonally adjusted 405,000, the lowest amount since mid-April.

Analysts had expected first time jobless claims to decline to 410,000.

A separate report showed that retail sales in June rose by 0.1%, confounding expectations for a flat reading.

Also Thursday, the U.S. Bureau of Labor Statistics said that producer price inflation declined by a seasonally adjusted 0.4% in June, after rising by 0.2% in May. Analysts had expected PPI to decline by 0.2% in June.

Stripping out the volatile food and energy categories, core wholesale prices rose 0.3%, more than the 0.2% increase expected.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.5% to trade at 75.17, hovering near the lowest level since June 6. 

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Meanwhile, Fed Chairman Bernanke was to deliver the second part of his testimony on monetary policy in Washington later in the day.

Testifying before lawmakers in Congress on Wednesday, Bernanke said that the central bank was examining several untested means to stimulate growth if conditions deteriorate, including another round of asset purchases or quantitative easing.

Concerns over rising debt levels in the U.S. and the euro zone also boosted the precious metal.

Moody’s Investors Service said late Wednesday that it placed the U.S. government’s Aaa bond rating on review for possible downgrade for the first time since 1995, citing “a small but rising risk” of a short-lived default.

Elsewhere, Italy auctioned EUR1.25 billion of five-year bonds at an average yield of 4.93%, the highest since June 2008 and up significantly from 3.9% in June.

The country also sold EUR1.71 billion of 15-year bonds at a record-high yield of 5.9%, compared to 5.34% from a previous auction. 

Elsewhere, silver for September delivery surged 2.85% to trade at a nine-week high of USD39.23 a troy ounce, as investors sought a cheaper alternative to gold.




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