Gold prices flat in Asia as Italy's referendum vote prompts caution

Investing.com - Gold prices held mostly steady in Asia on Monday as investors reacted cautiously to a new round of political turmoil in Italy and potentially the euro zone following a resounding "No" vote on a referendum aimed at political reforms.

Gold for February delivery traded between small gains and losses at levels around $1,177.55 a troy ounce on the Comex division of the New York Mercantile Exchange. Elsewhere, silver for March delivery was also mostly flat around $16.830 a troy ounce, while copper futures for March delivery dropped 0.84% to $2.608 a pound.

Investors did take sharp note of a weaker euro to a 20-month low as Italian Prime Minister Matteo Renzi resigned after suffering a humiliating defeat in a referendum to reform the country's constitution.

Elsewhere, New Zealand Prime Minister John Key said he would resign, making it clear he would not seek a fourth term.

Later on Monday, the U.K. is to release data on service sector activity and the Institute for Supply Management is to release its non-manufacturing PMI. New York Fed President William Dudley is to speak about the macroeconomic outlook in New York. St. Louis Fed head James Bullard is to speak at an event in Arizona.

Last week, gold prices rose on Friday, moving higher for the first time in four sessions despite a solid U.S. jobs report as the dollar slid, helping support demand for the precious metal.

The Labor Department reported Friday that the U.S. economy added 178,000 jobs in November from the prior month, while the unemployment rate dropped to 4.6%, its lowest level in nine years.

Economists had forecast nonfarm payrolls rising by 175,000 last month and the unemployment rate remaining unchanged at 4.9%.

However, the report also showed that average hourly earnings fell 0.1% from October, while the annual rate of wage growth slowed to 2.5% from 2.8% in October.

The jobs report underlined the Fed’s case for a rate hikes at its upcoming meeting on December 13-14, but the weak wage data clouded the outlook for further rate hikes in 2017.

Expectations of tighter monetary policy tend to weigh on gold, which struggles to compete with yield-bearing assets when borrowing costs rise.

In the week ahead, markets will be paying close attention to speeches by Fed officials and U.S. data on non-manufacturing activity and consumer confidence going into the holiday period.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

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