Gold Futures Settle Lower

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Gold prices drifted lower on Thursday as the dollar inched up, recovering from recent losses. Gold also reacted to the European Central Bank’s decision to leave its policy rate on hold.

However, lingering uncertainty about the pace of global economic recovery due to the surge in coronavirus cases and fears of more lockdown measures somewhat limited the yellow metal’s decline.

The dollar index, which ended at 96.08 on Wednesday after falling to a low of 95.78, rebounded after early weakness today, and was last seen at 96.32, up nearly 0.25% from previous close. The index touched a low of 95.89 around mid-morning.

Gold futures for August ended down $13.50 or about 0.7% at $1,800.30 an ounce, the lowest settlement since July 6.

Silver futures for September lost $0.188 or 1% at $19.573 an ounce, while Copper futures for September settled at $2.9015 per pound, gaining $0.0165 or 0.6% for the session.

The ECB today left its key interest rates and the size of asset purchases unchanged as policymakers weigh the effect of the previous actions. The main refi rate was left unchanged at a record low zero and the deposit rate at -0.50%, in line with economists’ expectations. The lending rate was kept at 0.25%.

The ECB also said it will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of EUR 1,350 billion.

In U.S. economic news, a report from the Labor Department said initial jobless claims slipped to 1.300 million in the week ended July 11th, a decrease of just 10,000 from the previous week’s revised level 1.310 million. Economists had expected jobless claims to drop to 1.250 million from the 1.314 million originally reported for the previous week.

Jobless claims fell for the fifteenth consecutive week, although the pace of decline has slowed considerably from April and May.

Data from the Commerce Department said retail sales soared by 7.5% in June after skyrocketing by an upwardly revised 18.2% in May. Economists had expected retail sales to jump by 5% compared to the 17.7% spike originally reported for the previous month.

In geopolitical news, U.S.-China tensions intensified after a senior U.S. official likened China’s state enterprises to Britain’s colonizing East India Company.

A day after Secretary of State Mike Pompeo branded most of Beijing’s claims in the sea illegal, U.S. Assistant Secretary in the Bureau of East Asian and Pacific Affairs, David R Stilwell, told a Washington think-tank that oil major CNOOC and other firms were serving as “battering rams” to intimidate other nations.

In another development, a White House National Security Council spokesman said that President Donald Trump has not ruled out further sanctions on top Chinese officials for actions in Hong Kong or on other issues.

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