Gold pares gains after deluge of economic data
San Francisco (Nov 27) Gold futures pared gains on Wednesday as traders mulled the metal’s appeal against a backdrop of rising U.S. consumer sentiment and declines in durable-goods orders and a Chicago’s business gauge.
Trading on Comex will be closed Thursday for the Thanksgiving holiday and there’s an early close for Friday’s session.
The precious metal has lost most of its shine from earlier trading “as the economic data in the U.S. started to hit the tape,” said Naeem Aslam, chief market analyst at AvaTrade.
A gauge of consumer sentiment rose to a final reading of 75.1 in November, according to Wednesday reports. MarketWatch-polled economists were looking for a final reading of 73.
The leading economic index also climbed in October by 0.2% to 97.5. And applications for unemployment benefits fell for the sixth time in seven weeks, with claims falling by 10,000 to 316,000 in the week ended Nov. 23. MarketWatch-polled economists expected a rise to 300,000.
A gauge of Chicago-area businesses fell to 63 in November, but was better than the market expected. Durable goods orders dropped 2% in October, compared with expectations for a decline of 2.2%.
The “patchy data” is fueling the tapering argument amid some traders, who already are holding big short positions on gold, Aslam said in an email interview. Traders have been studying the economic data for hints on when the Federal Reserve will begin to taper, or scale back, its bond-buying program.
“Given that we have subdued inflation in the U.S. and unwinding of ultra-loose monetary policy, the long-term trend could very well stay in play for gold — which is towards the downside,” said Aslam.
In Europe, data were upbeat, with consumer confidence in Germany rising to the highest level in more than six years and the U.K. economy showing 0.8% growth in the third quarter.
“Europe is very important to gold and silver,” said Chintan Karnani, chief market analyst at Insignia Consultants, in an email from New Delhi. “A stable growth-oriented euro zone and U.K. will result in a continued bearish trend for gold and silver and vice-versa.”
On a technical level, gold can rise to $1,269 as long as it trades over $1,235, he said, adding that silver can rise to $20.40 and $21.45 as long as it trades over $19.70.
