Gold Swings Near Five-Month Low as Investors Weigh Taper Outlook
London (Dec 9) Gold swung between gains and losses above a five-month low in London as investors weighed the outlook for reduced U.S. stimulus as early as next week.
Prices fell to $1,210.61 an ounce on Dec. 6, the lowest since July 5, before rebounding, as data showed the U.S. jobless rate dropped to a five-year low of 7 percent in November as employers added more workers than economists forecast.
Bullion is set for the first annual drop in 13 years as some investors lost faith in the metal as a store of value. The Federal Reserve may begin reducing the $85 billion in monthly bond buying at a Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 poll.
The “U.S. employment report came in strong and although our baseline case remains that the Fed will start tapering in March 2014, Friday’s report does increase the likelihood of December tapering,” Suki Cooper, an analyst at Barclays Plc in New York, wrote in a report today. “The U.S. monetary policy outlook and U.S. economic data will remain the key market theme of the market in the short term.”
Gold for immediate delivery added 0.1 percent to $1,230.03 by 9:11 a.m. in London. Prices rose as much as 0.5 percent and fell as much as 0.3 percent. Bullion for February delivery was little changed at $1,229.40 on the Comex in New York. Futures trading volume was 42 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
ETP Holdings
Holdings in gold-backed exchange-traded products fell 2.3 metric tons to 1,828.8 tons on Dec. 6, the lowest since February 2010, data compiled by Bloomberg show. Hedge funds and other speculators cut their bullish wagers on gold 16 percent to 26,774 contracts in the week ended Dec. 3, the lowest since June 2007, U.S. Commodity Futures Trading Commission data show.
“The strong jobs number has raised the probability of a tapering by the Fed this month,” said Wang Xiaoli, the chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “As the market warms to the idea of sooner-than-later reduction of stimulus, sentiment toward gold will continue to cool.”
Silver for immediate delivery rose 0.2 percent to $19.554 an ounce in London. Palladium fell 0.3 percent to $732.34 an ounce. Platinum added 0.2 percent to $1,361.75 an ounce.
