MW: Gold cuts loss after drop in consumer sentiment
By Myra P. Saefong and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures regained lost ground Friday as traders weighed news of the first drop in U.S. consumer sentiment since August against flat industrial production and a rise in consumer prices in February.
Gold for April delivery GCJ2 0.00% fell $1 to $1,658.50 an ounce on the Comex division of the New York Mercantile Exchange after trading as low as $1,639.70 earlier.
Prices had been trading around $7 lower shortly before the data on consumer sentiment.
Consumer sentiment dipped to 74.3 in a preliminary reading for March from a final level of 75.3 for February, according to Friday reports on the gauge from the University of Michigan/Thomson Reuters. Economists polled by MarketWatch had expected a March reading of 76.5.
Data released earlier Friday from the Labor Department showed that U.S. consumer prices increased by 0.4% in February, with core prices rising 0.1% on a seasonally-adjusted basis. Economists surveyed by MarketWatch had forecast a 0.5% increase in the CPI, with a 0.2% rise in the core rate.
“Consumer prices are accelerating, and inflation expectations are higher still,” said Adrian Ash, head of research at BullionVault. “Together with bargain-hunting by Asian consumers, that’s likely to put a floor under gold soon enough. People buy gold when they fear inflation ahead.”
Also Friday, the Federal Reserve reported that output of the nation’s factories, mines and utilities was unchanged last month, below Wall Street expectations of a 0.4% gain. Read more on industrial production.
Gold closed Thursday’s Comex session 1% higher, driven by a combination of bargain-hunting and a weak U.S. dollar. Thursday's gold session
Gold is on track to post a weekly loss of around 3% with dampened expectations of more monetary stimulus from the Federal Reserve and recent strength in the U.S. dollar key factors pressuring prices.
The dollar traded lower after Friday’s U.S. economic data. The ICE dollar index DXY -0.64% , which tracks the greenback against a basket of six other major currencies, fell to 79.766, up from 80.158 in late North American trading on Thursday.
“The reduced probability of further quantitative easing in the U.S. [has] weighed upon the precious metals,” strategists at Barclays Capital said. “Gold still faces near-term hurdles such as bouts of dollar strength, broad risk reduction and profit-taking.
“However, the broader macro backdrop remains favorable for gold, given the negative interest rate environment, longer-term inflationary concerns and lingering sovereign debt uncertainties,” the strategists added.
Most other metals fell on Comex, but copper climbed, extending gains from the previous session.
May copper HGK2 -0.12% was up 2 cents, or 0.5%, at $3.92 a pound.
Silver for May delivery SIK2 -0.54% slipped 7 cents, or 0.2%, to $32.65 an ounce.
April platinum PLJ2 -0.31% shed $5.50 to $1,678.40 an ounce, while June palladium PAM2 -0.89% fell $5.15, or 0.7%, to $704.75 an ounce.
