Investing.com - Gold extended gains on Thursday, after weaker than expected U.S. retail sales and jobless claims data dampened optimism over the strength of the economic recovery.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery tacked on $7.00, or 0.57%, to trade at $1,226.60 a troy ounce during U.S. morning hours. Prices held in a range between $1,216.60 and $1,232.70.
A day earlier, gold hit $1,216.50, the lowest level since January 9, before settling at $1,219.60, down $12.60, or 1.02%, as a broadly stronger U.S. dollar weighed.
Futures were likely to find support at $1,208.70, the low from January 9, and resistance at $1,238.70, the high from February 11.
The U.S. Commerce Department said that retail sales declined by 0.8% last month, worse than expectations for a drop of 0.5%.
Core retail sales, which exclude automobile sales, slumped by 0.9% in December, disappointing forecasts for a 0.4% decline.
Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy.
Core sales correspond most closely with the consumer spending component of the government's gross domestic product report. Consumer spending accounts for as much as 70% of U.S. economic growth.
At the same time, the U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending February 7 increased by 25,000 to 304,000 from the previous week’s revised total of 279,000. Analysts had expected initial jobless claims to rise by 6,000 to 285,000 last week.
The disappointing data scaled back expectations that the Federal Reserve will start raising rates from near zero levels as early as June.
The U.S. dollar came under broad selling pressure as expectations grew the Federal Reserve would keep its loose monetary policy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.65% to 94.53.
Dollar weakness has been fueling the rally in gold as economic uncertainties and speculation on more monetary easing by central banks drive investors to bullion as an alternative investment.
Also on the Comex, silver futures for March delivery picked up 14.2 cents, or 0.85%, to trade at $16.90 a troy ounce. Silver slumped 11.2 cents, or 0.66%, on Wednesday to end at $16.76.
Elsewhere in metals trading, copper for March delivery rose 4.6 cents, or 1.8%, to trade at $2.587 a pound, as investors cheered reports of a cease-fire agreement between Russia and Ukraine.
Russian President Vladimir Putin confirmed that a cease fire deal with Ukraine starting February 15 had been reached, following months of violence.
The leaders of France and Germany helped broker the deal after nearly 12 hours of all-night peace talks.
Market sentiment remained subdued after talks between Greece and European Union officials ended without an agreement, though both sides said there was still hope for a deal. Further talks are due to be held next Monday.
Greece’s current bailout is due to expire on February 28 and the new Greek government does not want it extended, fuelling fears over a conflict with its creditors which could trigger the country’s exit from the euro zone.
Athens has proposed an overhaul of 30% of its massive bailout deal, replacing it with a 10 point plan of economic reforms.
However, Greece’s creditors in the EU are insisting that the country must stick to the terms of the original bailout agreement.