Gold Holds Off 3-Week High For 2nd Day

Gold rush eased in the early hours of trade Tuesday morning as prices hit the highest in nearly three weeks, buoyed by weaker stock markets and strong investment demand from Asia.

The bullion markets took a breather from the upswing that took prices higher for the sixth consecutive session, rebounding from the hectic losses the metal suffered last year. Meanwhile, softer equities and more optimistic outlook for investment demand from top buyers, China and India, continue to cushion price, which apparently looks stuck in a sideway trade.

Spot gold was down %0.13% at $1,240.65 as of 02:38 EST, compared with the opening price at $1,241.65. The metal has so far set an intraday high of $1,240.65 and low of $1,235.00.

Although the Federal Reserve`s tapering reality is haunting the yellow metal with the start of the year, few bulls can`t just get of gold, which has now rallied more than 3% following its 28% rout in 2013, the worst annual slump in more than three decades.

The euro-area economy was under close scrutiny today with December released of unemployment data for Germany and the flash estimate of consumer price inflation in the euro area. Later, watch for US export growth in today`s international trade report for November.

Exports are pivotal for the nation`s manufacturing sector which posted a very strong November based on yesterday`s factory orders report, showing a broad strength, but December services orders, as measured by the ISM, posted their la4rgest month-to-month decline since the peak of the crisis in 2008.

However, one month is only month, right! The order trend for services was very strong heading in to December. Moreover, the services employment index was very strong and signals strength for Friday`s infamous jobs report, which will be closely watched for clues on the strength of the economic recovery.

The strength of the US dollar and the heavy Fedspeak, which was led by comments from outgoing chair Ben Bernanke who said the economy, has made important progress and that despite the tapering reality, the Fed remains committed to accommodative policy.

The Fed will release minutes from its Dec 17-18 meeting of the Federal Open Market Committee (FOMC), which debuted the decision to start tapering the central bank’s monthly asset purchases to $75 billion. The minutes are due Wednesday 02:00 p.m. and will be watch closely for signals over how far the FOMC could further reduce its asset purchases.

The Fed will buy $40 billion in Treasuries in January, down from $45 billion in December, and $35 billion in mortgage-back securities.

Next week will also feature policy decisions from the European Central Bank (ECB) and the Bank of England (BOE).