Gold futures retain gains following mixed U.S. data, China demand supports

Gold was mostly unchanged following a series of mixed U.S. data released on Thursday, which left investors ambivalent about their expectations for an earlier-than-expected Fed stimulus tapering. Prices remained supported by increased demand from China following a recent decline in prices and as jewelers and retailers restocked inventories ahead of the peak-demand season in the end of the year. Silver, platinum and palladium tracked golds upward momentum.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in February traded at $1 246.80 per troy ounce at 14:49 GMT, up 0.43% on the day. Prices shifted in a days range between $1 254.10 and $1 241.15 an ounce. The precious metal lost 0.8% on Tuesday but rose back to positive weekly territory on Wednesday, up 0.3%.

Gold remained mostly unchanged following a string of key U.S. economic indicators, which sent investors mixed signals. The Labor Department reported that the number of Americans who filed for initial unemployment benefits fell by 10 000 to a two-month low of 316 000 in the week ended November 23, defying analysts projections for an increase to 330 000. Applications for the previous week were revised up by 3 000 after being initially estimated at 323 000.

The four-week moving average, which smooths out weekly volatility, fell by 7 500 to 331 750, indicating a steady improvement in the U.S. labor market. The insured unemployment rate, which includes the jobless people eligible for aid, fell to 2.1% in the week ended November 16, down from 2.2% in the previous period.

The number of people who continued to receive unemployment benefits slid by 91 000 to 2.776 million, the lowest since January 2008, sharply outperforming analysts expectations for a 14 000 drop. Those Americans who have exhausted traditional state help and are receiving extended benefits under federal programs rose by 3 400 to 1.31 million in the week ended November 9.

A separate report by the Commerce Department showed that orders for U.S. durable goods fell in October, coinciding with recent reports which suggested confidence in the U.S. was hurt last month by the 16-day government shutdown. Bookings for goods set to last at least three years fell by 2.0% in October as demand for civilian and defense aircraft plunged, marking a major retreat from Septembers upward-revised 4.1% advance. Analysts expected a 1.9% contraction.

Orders for commercial aircraft declined by 15.9% last month after surging 59.2% in September.

Demand for non-defense capital goods orders ex aircraft, a gauge for future business investment in computers and other equipment, fell by 1.2% in October after they retreated by 1.4% in September, confounding analysts projections for a 0.6% advance.

Core durable goods, which exclude the volatile transportation equipment, dropped by 0.1% after gaining 0.2% in September, a third monthly decline in four, mismatching projections for a 0.5% gain.

The drop in bookings for durable goods suggested a weakness in the manufacturing sectors recently found strength, mainly based on Octobers 16-day government shutdown hurting confidence.

Millan Mulraine, director of U.S. rates research at TD Securities USA LLC in New York, commented for Bloomberg: “One would expect a bit more trepidation on the part of businesses at the time of heightened uncertainty emanating from Washington. Once we get more fiscal clarity, which is likely to come in the next few months, we’re likely to see a much more favorable backdrop for hiring and investment.”

The Conference Board reported on Tuesday that its Consumer Confidence Index fell to 70.4 in November, a third straight monthly decline. Analysts expected a slight retreat to 72.1 after confidence sharply declined in October to a revised 72.4 from 80.2 in September. The Present Situation Index slipped to 72.0 from 72.6, while the Expectations Index declined to 69.3 from 72.2 last month.

China demand

The yellow metal continued to draw support by increased demand from China, the worlds second largest consumer. Gold shipments to China from Hong Kong rose in October as jewelers and retailers rebuilt inventories with the peak-gold demand season of the year coming closer.

According to calculations by Bloomberg based on data from the Hong Kong Census and Statistics Department, net imports, after deducting flows from China into Hong Kong rose to 129.9 metric tons in October, compared to 109.4 metric tons a month ago. The data also showed that purchases reached an all-time high of 130 tons in March and the amount for the first 10 months of 2013 surged to 955.9 tons, more than double from a year earlier.

China is poised to overtake India as number one consumer of bullion by the end of the year, with demand set to reach 1 000 tons, according to estimates by the World Gold Council.

Elsewhere on the precious metals market, silver futures for settlement in March were mostly unchanged at $19.913 per troy ounce at 14:45 GMT, up 0.10% on the day. Platinum for delivery in January traded at $1 373.75 per ounce, up 0.13%, while palladium March futures rose by 0.77% to $724.00 per troy ounce.