Gold futures plunge further after stronger-than-expected U.S. ISM data
San Francisco (Dec 2) Gold prices plunged sharply on Monday, after stronger-than-expected U.S. manufacturing activity data reinforced expectations for an eventual reduction in the Federal Reserve's monetary stimulus.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,229.00 a troy ounce during U.S. morning trade, down 1.7%.
Comex gold prices fell by as much as 1.9% earlier to hit a daily low of USD1,226.60 a troy ounce, the lowest since November 25.
The February contract settled 1.01% higher on Friday to end at USD1,250.40 a troy ounce.
Gold futures were likely to find support at USD1,226.40 a troy ounce, the low from November 25 and resistance at USD1,254.50, the high from November 29.
Gold prices tumbled to the lowest levels of the session after the Institute for Supply Management said its index of purchasing managers rose to a 31-month high of 57.3 in November from a reading of 56.4 in October.
Analysts had expected the ISM index of purchasing managers to inch down to 55.0 last month.
A separate report showed that U.S. manufacturing activity rose to a 10-month high of 54.7 in November, up from a preliminary reading of 54.3 and compared to 51.8 in September.
Investors now looked ahead to key U.S. economic data later in the week to further gauge the strength of the economy and the need for stimulus.
The U.S. is to release data on third quarter gross domestic product on Thursday, while November’s nonfarm payrolls report is scheduled for Friday.
The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labor and housing markets.
Prices of the precious metal lost 5.4% in November, the biggest monthly decline since June, after minutes of the Fed’s October meeting said the central bank could start scaling back its USD85 billion-a-month asset purchase program in the “coming months” if the economy continues to improve as expected.
Gold is down approximately 26% this year, heading for the first annual loss in 13 years.
Elsewhere on the Comex, silver for March delivery tumbled 2.5% to trade at USD19.53 a troy ounce, while copper for March delivery inched down 0.35% to trade at USD3.194 a pound.
