Gold drops as dollar gains on expectations for end of Fed stimulus
Published Nov 01, 2013 12:32PM ET
Stimulus measures such as the Fed's USD85 billion monthly bond-purchasing program weaken the dollar to spur recovery, making gold an attractive hedge.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,310.00 during U.S. afternoon hours, down 1.03%.
Gold prices hit a session low of USD1,305.80 a troy ounce and high of USD1,327.30 a troy ounce.
Gold futures were likely to find support at USD1,251.10 a troy ounce, the low from Oct. 15, and resistance at USD1,361.70, Monday's high.
The December contract settled down 1.90% at USD1,323.70 a troy ounce on Thursday.
In the U.S., a widely-watched factory barometer beat expectations and fanned expectations for the Federal Reserve to scale back dollar-weakening stimulus programs in the coming months, which sent the dollar rising.
The Institute of Supply Management's Manufacturing Purchasing Managers Index rose to 56.4 in October from 56.2 in September, defying expectations for a decline to 55.0.
The report came a day after data showed that manufacturing activity in the Chicago region expanded at the fastest rate in 30 years in October, while a separate report showed that U.S. initial jobless claims fell in line with expectations last week.
Expectations for the European Central Bank to cut interest rates possibly next week bruised the euro and sent the dollar rising even further, which exacerbated gold's losses.
On Thursday, official data revealed that the euro zone's consumer price index rose 0.7% in October, the slowest pace since November 2009, after rising 1.1% in September, while the unemployment rate came in at a record high 12.2% in September.
Elsewhere on the Comex, silver for December delivery was up 0.05% at USD21.877 a troy ounce, while copper for December delivery was up 0.04% and trading at USD3.302 a pound.
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Written By: Investing.com
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