Gold poised for further slide

via Gold poised for further slide | The Herald Reuters November 10, 2013

Gold edged above three-week lows last week, but was still set for a second week of losses as the dollar steadied after the European Central Bank’s surprise interest cut and ahead of a crucial US jobs report.

Investors waited for monthly US non-farm payrolls data later last Friday for further direction and clues on the timing of the tapering of the Federal Reserve’s economic stimulus.

A strong number would increase expectations the Federal Reserve will start tapering its bond-buying programme sooner rather than later, particularly after last Thursday’s robust US growth figures.

An end to the Fed’s quantitative easing programme would hurt gold, which has been boosted by central bank liquidity and a low interest rates environment, encouraging investors to put money into non-interest-bearing assets.

Economists polled by Reuters expect 125 000 jobs to have been added in October, although last month’s 16-day US government shutdown may affect the figures.

“A relatively low number for the US non-farm payrolls data has already been discounted by the market, but it is possible that we see a small up tick in the employment rate to 7,3 percent,” VTB Capital analyst Andrey Kryuchenkov said.

“The market is today trying to consolidate and if we don’t get any surprise from the non-farm payrolls, we will probably hold here with support at US$1 300 and then US$1 270,” he said.

Spot gold edged up 0,1 percent to US$1 308,89 an ounce by 10.53am GMT. The metal has lost 0,4 percent for the week so far, having hit a three-week low of US$1 298,31 last Thursday. Comex gold futures for December were up US$0,6 to US$1 309,10 an ounce. The dollar was near a seven-week high against a basket of currencies, also boosted by data last Thursday showing US gross domestic product grew at a 2,8 percent annual rate in the third quarter, the quickest pace in a year.

Gold has lost about a fifth of its value this year due to fears the Fed would begin cutting back its US$85 billion monthly bond purchases. The metal’s inflation-hedge appeal has been burnished by the bond purchases and low interest rates. Investors had believed a prolonged budget battle in Washington in October would prevent the Fed from withdrawing support for the economy and possibly push the tapering into next year. However, last Thursday’s GDP data rekindled fears of a roll-back at the Fed’s December meeting.

Spot silver rose 0,1 percent to US$21,67 an ounce, having fallen to a three-week low of US$21,36 in the previous session.

Spot platinum gained 0,2 percent to US$1 451,50 an ounce. Spot palladium fell 0,5 percent to US$754,72 an ounce. It reached its highest level since August 15 at US$762,25 last Thursday.— Reuters.