Gold Nears $1300, Modest Gains Seen In Global Stock Markets

LONDON (Oct 3)  Gold futures are trading sharply lower in the early Europe session today, with the traders awaiting further data releases from US to get further cues on its bond buying program. The losses were also triggered by the modest gains in the European and the Asian equities reducing the appeal for yellow metal.

European stock markets opened higher on Thursday, rebounding from the biggest one-day drop in more than a month, as Chinese data showed the services sector expanded at the fastest pace in six months in September.

On Wednesday, most stock markets in Europe posted steep losses on concerns about the ongoing budget debacle in the U.S. and on Thursday the government shutdown moved into its third day. The Stoxx Europe 600 index climbed 0.2% to 311.53, after losing 0.7% on Wednesday. Germany's DAX 30 added 0.1% to 8,642.11, while France's CAC 40 index slipped 0.1% to 4,155.38.

Gold for December tumbled $ 8.2 at $1,315.40 an ounce, after gaining $34.60, or 2.7%, to settle at $1,320.70 an ounce on Wednesday when it found support from disappointing economic data.

Investors later Thursday will receive the U.S. government's weekly report on jobless claims. The market will also monitor developments in Washington, where a meeting between U.S. President Barack Obama and top lawmakers late Wednesday failed to produce a deal to end the partial shutdown of the government, the first in 17 years.

The Fed had widely been expected in September to reduce the size of its bond-buying program from $85 billion a month, but determined that the labor market and the overall economy wasn't yet strong enough to withstand any reduction.

MCX December gold futures are trading up more than Rs 200 at Rs 29250 per 10 grams. The domestic metal is trading higher trying to cover up Wednesday's rally in the international gold, as the Indian markets were closed for a national holiday.