LONDON: Gold prices fell for a second day yesterday as upbeat US jobs data lifted the dollar and fuelled speculation that the Federal Reserve will continue scaling back monetary stimulus.
The dollar touched a one-month high versus the euro yesterday after the ADP national employment report showed US private employers had added 238,000 jobs in December, the highest number in 13 months.
The ADP figures also added pressure on gold by supporting expectations that the Federal Reserve will further scale back its ultra-loose monetary policy, a major driver of the record-high bullion prices seen in recent years.
Spot gold was down 0.8 percent at $1,222.00 an ounce at 1530 GMT, while US gold futures for February delivery were down $8.50 an ounce at $1,220.10.
The metal is still up 1.8 percent this year after tumbling 28 percent in 2013, its first annual loss in 32 years as the Fed geared up to taper its stimulus.
“This for me was just a corrective bounce within the overall downtrend,” Societe Generale analyst Robin Bhar said. “The US data remains bright. The ADP data suggested that the jobs report on Friday will be pretty robust, which would be another reason for the Fed to accelerate tapering.”
“We’ll know more with the minutes published later today,” he said. The minutes of the Fed’s latest policy meeting will be released at 1900 GMT.
“We may see a lower move in gold prices ... in the aftermath of the Fed minutes,” INTL FCStone also said in a note.
“Although the complex rallied when the Fed initially made its tapering announcement, we don’t think the precious metal will react in the same manner given that the initial move higher in the wake of the announcement was somewhat counterintuitive.”
Friday’s non-farm payrolls are seen as a crucial indicator of the US monetary policy outlook, given that the Fed has explicitly said it will await an improvement in the jobs market before it accelerates its tapering programme.
Physical demand from China, which is expected to have taken over from India as the world’s number one gold consumer last year, slackened on Wednesday from strong levels earlier in the week, dealers said.
Reuters
