Gold futures ended sharply higher on Monday, amid a rally in global equity markets that curbed demand for the yellow metal, even as the dollar weakened against a basket of major currencies.
In some soft economic news, a National Association of Realtors report on Monday showed existing home sales in the U.S. to have pulled back more than expected in November, after reporting sales at their highest in a year the previous month.
While the Federal Reserve’s statement Wednesday indicated the central bank would remain ‘patient’ before hiking interest rates supported gold, a stronger dollar and firm global equity markets limited the yellow metal’s upside.
Meanwhile, trading volumes were thin and expected to remain so this week, ahead of the Christmas holiday the New Year’s holiday.
Gold for February delivery, the most actively traded contract, dived $16.2 or about 1.4 percent, to settle at $1,179.80 an ounce on the Comex division of the New York Mercantile Exchange on Monday.
Gold for February delivery scaled an intraday high of $1,203.60 and a low of $1,176.90 an ounce.
On Friday, gold futures ended higher at $1,196.00 an ounce, up $1.20 or 0.1 percent, as global equity markets trended up with demand for the safe haven metal remained tepid
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, edged higher to 724.55 tons from its previous close on Friday.
The dollar index, which tracks the U.S. unit against six major currencies, traded at 89.58 on Monday, down from its previous close of 89.63 late Friday in North American trade. The dollar scaled a high of 89.64 intraday and a low of 89.37.
The euro trended higher against the dollar at $1.2249 on Monday, as compared to its previous close of $1.2229 late Friday in North American trade. The euro scaled a high of $1.2276 intraday and a low of $1.2223.
In economic news from the U.S., a report from the National Association of Realtors showed existing home sales to have pulled back much more than expected in the month of November, declining 6.1 percent to a seasonally adjusted annual rate of 4.93 million, after climbing 1.4 percent to 5.25 million in October. Economists expected existing home sales to edge down to 5.20 million.
Germany’s real wage index rose for the third consecutive quarter, at the fastest pace in more than three years, during the three months to September, figures from Destatis showed Monday.
Real wages climbed 1.8 percent year-on-year in the third quarter, faster than the 1.5 percent rise in the previous three months. The rate of growth was the highest since the second quarter of 2011 when it increased 1.9 percent.
Elsewhere, the China unveiled rules to ease market access for foreign banks in order to open up the domestic financial sector. The State Council amended its rules requiring foreign banks to transfer a specific amount of operating funds to its new branch in China. Foreign banks will also be allowed to conduct yuan transactions after operating in China for at least a year compared to the prior requirement of three years.
Meanwhile, the Bank of Japan turned more upbeat on the economy, the Monthly Report on Recent Economic and Financial Developments revealed Monday. Japan’s economy has continued to recover moderately as the decline in demand following the sales tax hike have been waning on the whole.
Traders will be looking ahead to third quarter GDP report, durable goods orders data for November, the consumer confidence report from University of Michigan, new home sales report for November and weekly jobless claims report this week.
The material has been provided by InstaForex Company – www.instaforex.com