Gold Heads Towards $1300 On Profit Taking

SINGAPORE (Oct 3)  Gold futures seems like heading towards $1300 an ounce levels in the Asia electronic action today as traders booked profits after the metal jumped nearly 3% yesterday as the ongoing US government shutdown raised its safe haven appeal.

Gold futures for December delivery fell $8.3 at $ 1312.4 an ounce on the Comex division of the New York Mercantile Exchange. The metal may find support near $1270 levels. The December contract settled higher by 2.69% at $1,320.70 per ounce on Wednesday.

The metal rallied Wednesday as the weaker-than-expected U.S. private sector payrolls data raised doubts about how quickly the Federal Reserve will begin to taper its bond-buying program.

In US economic news, the ADP employment report showed a weaker than expected reading of 166K, lower than the 177K estimate for September. The August figure suffered a downward revision from 176K to 159K, reflecting a downturn in hiring for the past quarter.

On Capitol Hill, Republicans and Democrats are still butting heads and unable to come up with a budget plan, forcing the US government shutdown to extend to its second day. This caused the US dollar to lose its appeal as a safe-haven investment.

Moody's Investors Service warned that a failure to raise the debt limit would result in a worse outcome for financial markets than a government shutdown.

The central bank is scheduled to meet October 29-30 to review the economy and assess policy. Markets were also mulling over how the political deadlock in Washington will impact on negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.

MCX December gold futures may open today's session near Rs 29000 levels with support near Rs 28900-700 levels.