Gold futures push lower amid Fed stimulus uncertainty

Investing.com - Gold futures extended steep losses from the previous session on Monday, amid ongoing speculation the Federal Reserve will begin tapering its asset purchase program at its October policy meeting.

Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,321.80 a troy ounce during U.S. morning hours, down 0.8%.

Gold prices fell by as much as 1.4% earlier in the day to hit a session low of USD1,313.60 a troy ounce, the weakest level since September 18. The December contract settled 2.7% lower on Friday at USD1,332.50 a troy ounce.

Gold futures were likely to find support at USD1,291.70 a troy ounce, the low from September 18 and resistance at USD1,375.10, the high from September 19.

The precious metal tumbled on Friday after St. Louis Fed President James Bullard said that a small tapering of bond purchases is “possible” at the Fed’s October meeting.

The Fed will hold its next monetary policy meeting on Oct. 29-30.

Gold prices soared by as much as 4.5% on September 18 after the Fed decided to leave its USD85 billion-a-month stimulus program unchanged.

The decision surprised markets, which had been expecting the central bank to taper its monthly stimulus program by USD10 billion to USD15 billion.

The precious metal is on track to post a loss of nearly 22% on the year as traders bet an improving U.S. economy would lead the Fed to unwind its stimulus program by the year's end.

Elsewhere on the Comex, silver for December delivery fell 1.1% to trade at USD21.68 a troy ounce, while copper for December delivery dropped 1.1% to trade at USD3.285 a pound.

Copper futures were lower as traders digested a series of manufacturing reports out of China and the euro zone in an attempt to gauge the strength of the global economy.

Data released earlier in the day showed that manufacturing output in the euro zone was weaker than expected this month.

The preliminary reading of the euro zone manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.

Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.

A separate report showed that manufacturing activity in France contracted at the fastest pace in three months in September.

Europe as a region is third in global demand for the industrial metal.

Meanwhile, in China, data showed that the country’s HSBC Flash Purchasing Managers Index rose to a six-month high of 51.2 in September from a final reading of 50.1 in August.

The measure remained above the 50.0-mark for the second consecutive month, indicating expansion in manufacturing activity.

Copper traders consider shifts in the HSBC PMI an indicator of China's copper demand, as the industrial metal is widely used by the sector.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.