Gold eases after short-covering rally, tapering fears drag
Bullion prices rose the most in over a month on Wednesday despite strong data on US private-sector hiring and service industry growth in the run up to the nonfarm payroll data on Friday.
December 05, 2013 / 11:00 IST
Gold edged lower on Thursday following a short-covering rally in the previous session, weighed down by concerns the US Federal Reserve ould soon begin tapering its monetary stimulus on strong economic data.
Bullion prices rose the most in over a month on Wednesday despite strong data on US private-sector hiring and service industry growth in the run up to the nonfarm payroll data on Friday.The short-covering gains came after gold hit fresh five-month lows for three straight sessions."The markets are still positioned quite short. There is going to be a bigger reaction to a weaker-than-expected nonfarm payrolls report than to stronger-than-expected numbers," said Victor Thianpiriya, an analyst at ANZ.Also Read: Jewellers find little to cheer despite wedding season buzz"If it's a strong report, it would just give the existing shorts a bit more validation and we could see prices go back to USD 1,220," he said.Prices risk falling to USD 1,180 - gold's three-year low hit in June - if they drop below USD 1,215, Thianpiriya said.Spot gold had fallen 0.4 percent to USD 1,238.23 an ounce by 0345 GMT, after gaining 1.6 percent in the previous session.Silver also edged lower after climbing nearly 3 percent in the previous session.Investors are in data-watch mode to determine how soon the Fed could begin scaling back its USD 85 billion in monthly bond purchases.They worry that strong data could prompt the central bank to taper from this month, with a policy meeting December 17-18.The bond-buying stimulus has strongly supported gold prices as it boosts the metal's inflation-hedge appeal.Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 2.70 tonne to 838.71 tonne on Wednesday - their lowest since early 2009. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
