Gold eases on strong greenback amid wait-and-see approach
New York (Nov 5) Gold futures eased on Tuesday, trimming gains booked earlier in the session as investors refrained from taking big positions ahead of crucial US data due later in the week. Adding to that, the metal continued to be under pressure from the stronger US dollar.
Gold contracts for December retreated 0.23% to $1,311.70 an ounce on New York's Comex as of the time of writing, followed by silver futures that lost 0.33% to $21.630 an ounce.
The US dollar index, measuring the strength of the greenback versus a basket of six of its major peers, was seen 0.10% higher at 80.630.
Never-ending tapering speculations continued to busy global investors, as the US Federal Open Market Committee (FOMC) meeting scheduled for December 17-18 approaches. At last month's meeting central bank policymakers decided to stick with the $85-billion monthly asset buying program as the world's number one economy had showed some sluggish macro data and the partial government shutdown was thought likely to have burnt off some of the fourth quarter's economic growth.
Still, surprisingly for many, the October FOMC statement was considerably less dovish than generally expected, leading many analysts to the conclusion that tapering might start before the end of the year. Prior to that, market consensus was for the bank not scaling back its stimulus until March 2014.
Data-rich week
St Louis Fed President James Bullard's comments from Monday elevated gold prices as he said the central bank does not have to "hurry" to reduce its monthly bond-purchasing program. However, this effect proved to be only short-lived ahead of crucial data from the US, starting with gross domestic product growth and labor data.
"Gold was not really helped by dovish Fed member comments," Mike van Dulken, Head of Research at Accendo Markets, commented this morning. "However, it may be more interesting to hear what ECB peers have to say with the bank’s president and several others talking today, especially with so much talk of deflation meaning a need for a rate cut on Thursday."
The Bureau of Economic Analysis' first estimate of the third-quarter GDP growth rate is projected by most economists to show a 2% rise, down from 2.5% in the previous three months. The data will be released on Thursday.
Adding to that, Friday will see the widely anticipated Labor Department's non-farm payrolls figure, which is expected to rise by 120,000 workers for the last month after a 148,000 gain in September.
Both readings are likely to be reflected in the Fed's decision. Stronger-than-expected readings may dramatically rekindle the likelihood of tapering, sending prices of precious metals lower.
