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Gold dropped with expected improvements in the US labor market seen to boost outlook for higher interest rates, strengthening the dollar and weakening demand for the metal right before the European Central Bank (ECB) meets.
Spot gold fell by as much as 0.2% for a price per ounce of $1,206.87 and was trading mid morning Singapore time at $1,207.17, based on generic pricing from Bloomberg. The precious metal reached its highest since OCtober 29th on December 1st when it $1,221.43 behind the whipsawing change in crude oil prices.
Futures for the gold with a delivery date in February declined by 0.1% for a price per ounce of $1,207.60 in New York’s Comex.
Gold is mostly unchanged this year after dropping by 28% in 2013 with the US Federal Reserve getting ready to hike up its interest rates, while other central banks around the world are still boosting economic growth. Policy committee members of the ECB are scheduled to meet today to discuss whether to introduce more stimulus.
Resource analyst David Lennox from Sydney’s Fat Prophets says that, “The U.S. dollar and the direction it goes will dictate the direction gold goes. You’d have to say the ECB has got to do something. Without some form of significant QE, that area is just going to bumble along.”
The Bloomberg Dollar Spot Index traded just under its best level since 2009 after the Fed announced yesterday that “employment gains were widespread”, preempting the release of official data tomorrow. The number of new jobs created in November is expected to be 230,000. The gauge reached $1,114.06, the highest since March 2009.
Spot silver fell by 0.2% for a price per ounce of $16.3818. Platinum fell by 0.1% to $1,225.13 per ounce, while palladium was mostly unchanged at $797.57 per ounce.
