Gold Ends Lower On Profit Taking, Fed Concerns

Reading Time: 2 minutes

Gold futures ended lower for a second straight session Monday, after investors resorted to profit taking while mulling the prospect of a cut to the Federal Reserve’s $85 billion monthly bond-buying program in October. Last week, St. Louis Fed President James Bullard said the central bank may consider scaling down its asset purchase program in October if the economy showed any significant signs of recovery. Bullard is an influential voting member of the Federal Reserve. Earlier, the Fed decided against any cut to its quantitative easing program, citing concerns that Congress will bicker about raising the debt ceiling and as well on sluggish growth in the jobs market.
Earlier in the day, Citigroup analysts indicated gold prices to likely drop below $1,250 an ounce before the end of the year. Citibank has also predicted price at that level for next year also. Meanwhile, Morgan Stanley analysts expect the precious metal to average $1,200 to $1,350 an ounce in 2014 and likely move down subsequently. Gold for December delivery, the most actively traded contract, dropped $5.50 or 0.4 percent to close at $1,327.00 an ounce Monday on the Comex division of the New York Mercantile Exchange.
Gold for December delivery scaled an intraday high of $1,332.00 and a low of $1,313.40 an ounce. Last week gold rose nearly 2 percent after the Federal Reserve decided against scaling down its $85 billion monthly bond-buying program earlier in the week. The dollar index, which tracks the U.S. unit against six major currencies, traded at 80.45 on Monday, up from 80.43 late Friday in North American trade. The dollar scaled a high of 80.53 intraday and a low of 80.29.
The euro traded lower against the dollar at $1.3502 on Monday, as compared to its previous close of $1.3549 late Friday in North America. The euro scaled a high of $1.3547 intraday and a low of $1.3480. In economic news from the eurozone, activity in Germany’s private sector economy increased further in September, and at a faster rate than in the previous month, helped entirely by strong improvement in business conditions in the service sector, data from a survey conducted by Markit Economics and BME showed. The seasonally adjusted composite output index, a measure of activity in the manufacturing sector and the service sector, advanced to an eight-month high of 53.8 from 53.5 in August.
Meanwhile, the euro zone private sector recovery strengthened further in September largely due to a strong upturn in services, preliminary data from Markit Economics showed. The Purchasing Managers flash composite output index rose more-than-expected to 52.1 in September, a 27-month high, from 51.5 in August. It was forecast to rise to 51.7.
An indicator of China’s factory sector performance rose to its highest level in six months in September as new export orders rebounded, preliminary results of a survey by Markit Economics and HSBC revealed Monday. The headline purchasing managers’ index rose to a six-month high of 51.2 in September from 50.1 in August. A PMI reading above 50 indicates expansion of the sector.
Source: RTT Staff Writer
Source:BullionBulletin

Share on

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed

Menu