COMEX Gold Falls; US Manufacturing Data Due

MumbaI-India (Dec 2)  Gold futures cracked down in the mid electronic session today, however the US dollar weakened after setting a fresh six-month high against the yen in Asia as investors awaited a series of major U.S. economic indicators to be released this week.

COMEX February gold futures are trading down $7.9 at $ 1242.5 an ounce in electronic hours today. In November it tumbled by more than 5% at $ 1250.4 an ounce with the sentiments hurt by the withdrawal of the QE program and also on rally in global stock markets and sharp drop in the Japanese Yen.

The greenback hit a fresh half-year high of Y102.65 earlier in the day, but soon fell on profit taking. The U.S. currency also fell against the Australian dollar after China's manufacturing data showed some expansion, prompting demand for the Aussie. Australia is a key resource supplier for China.

The HSBC China Manufacturing Purchasing Managers' Index had a final reading of 50.8 in November, compared with 50.9 in October. A reading above 50 indicates expansion.

MCX February gold futures contract is trading in backwardation to the December futures contract, indicating lack of demand in the market. MCX February contract tumbled below the Rs 29000 mark whereas the December contract expiring on 5th of the month is trading at Rs 30100 levels.

The domestic gold has been protected from sharp drop unlike the international gold futures, thanks to the long-lasting weakness in the Indian currency and the tight supplies in the markets. The futures contract ended November on flat note at Rs 29234 per 10 grams. In the near term the metal should trade in the range of Rs 28500- 29500 levels. The Rs 30000 mark should continue to act as resistance.

In the coming days, investors will continue to focus on U.S. economic indicators, including manufacturing sentiment data to be released later in the global day, to gauge the strength of the U.S. economy and the prospect of the Federal Reserve slowing down its asset purchases.