Gold prices closed higher as the euro made considerable gains against the dollar after eurozone inflation came in hotter than expected.
Gold for August delivery on the Comex division of the New York Mercantile Exchange increased $5.70 to settle at $1,194.40 per ounce. Trade ranged from $1,185.80 to $1,196.40.
The EU CPI flash estimate and the core CPI flash estimate were both positive at 0.3 percent and 0.9 percent respectively – inflation returned to the bloc for the first time in six months, suggesting the ECB’s stimulus programme is starting to take hold, while the risk of deflation has subsided.
The euro was 2.3 percent stronger at 1.1176 against the dollar, while the Dow Jones industrial average and S&P were up 0.1 percent.
“Gold remained relatively subdued following choppy trading conditions yesterday with little to report in Asia and European trading,” Triland Metals said. “The gradual advance back towards $1,200 this afternoon was attributed to currency moves rather than physical demand with the euro gaining over two percent against the dollar.”
Meanwhile, Greeks and officials from the ECB and the IMF remain locked in negotiations – while the country looks set to make a first repayment of 300 million euros to the IMF on June 5, it is unclear how it will pay off the rest of its debt.
“If anything, the Greek position may be turning a bit more hardline, as the country’s lead negotiator appointed to talk to the IMF was replaced by an official more palatable to the Syriza party,” INTL FCStone’s Edward Meir said.
In today’s data, the Spanish unemployment change at -118,000 was slightly better than expectations and while Germany’s jobless total only fell by 6,000 last month – below the expected drop of 10,000 – the national unemployment rate of 6.4 percent is a record low. But the eurozone PPI undershot at -0.1 percent.
In the US, April factory orders month-over-month in April were down 0.4 percent, while estimates predicated a null change. IBD/TIPP economist optimism for June was 48.1, off the forecast of 49.8
“First, the limited data in hand pertaining to the second quarter do not suggest a significant bounceback in aggregate spending, which we would expect if all of the weakness in the first quarter were due to transitory factors,” Federal Reserve board member Lael Brainard said in a speech.
“Second, it would not be the first time this recovery has proceeded in fits and starts. The underlying momentum of the recovery has proven relatively susceptible to successive headwinds, which have kept overall economic growth well below the average pace of previous upturns.”
As for the other precious metals, Comex silver for July delivery was up one cent at $16.790 per ounce. Trade has ranged from $16.610 to $16.840.
Platinum futures for July delivery on the Nymex were up $10.20 at $1,114.50 per ounce, while the most-actively traded palladium contract was at $768.30, down $4.45.
(Editing by Tom Jennemann)
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