Gold skids to 5-month low ahead of US jobs data
New York (Dec 4) Gold futures hit their lowest price since July on Wednesday, as some key job reports from the US to be released this week intensified tapering speculation. Traders await more US data to evaluate whether a reduction in the Federal Reserve's (Fed) monetary stimulus is likely to hit the markets as soon as this month, as the move would reduce gold's attraction as the world's best inflation and currency hedge.
Gold contracts for December slid 0.51% to $1,214.70 an ounce on New York's Comex as of the time of writing. Silver futures fell as well, down 0.55% to 18.955 an ounce.
Gold has tumbled roughly 27% this year, and is set for the first annual loss after it booked a string of twelve consecutive annual gains as tapering worries have marred the markets for months already.
The Fed's three rounds of so-called quantitative easing have been injecting almost $2 trillion into the economy since November 2008, nourishing gold prices - among others. As a result, gold soared roughly by 70% from December 2008 to June 2011. However, as signals of stable economic recovery have become more and more frequent, the central bank may start scaling back stimulus pretty soon - as soon as its December Federal Market Open Committee (FOMC) meeting, as some suggested. Still, market consensus speaks more about the March 18-19 meeting.
Macro releases
In fact, recent macro releases from the US suggested that the economic recovery has been gaining firmer ground. The world's number one economy's manufacturing sector accelerated in November at the fastest pace in more than two years, data showed on Monday.
The rest of the week will see closely watched economic figures, starting with ADP employment report (often considered a non-farm-payrolls warm up) which is expected to show a 170,000 gain - as Credit Agricole CIB told clients on Wednesday. "Our current forecast for non-farm payrolls is for a 180,000 gain, but we will revisit this if the ADP report comes in markedly different from expectations," the note read. The release will be published later in the day.
Friday will see the non-farm payroll data which is projected to have increased by 181,000 in November, market consensus said.
"Alongside ADP, expectations for the November ISM non-manufacturing index currently look for a slight decline to 55.0 from 55.4 in October. Market participants may anticipate the upside risk of an increase, however, after the ISM manufacturing survey beat expectations earlier this week," Credit Agricole CIB added in a note.
