Gold Likely To Stay Below $1,250 On Upbeat US Outlook

Gold was muted in a very short trade early Monday, suffering the cautious sentiment across the markets after the precious metal posted its worst November in more than 30 years.

Many analysts aren't optimistic about the outlook for gold, which has been for further losses ever since a series of positive US economic data signals raised speculation that the Federal Reserve would reduce its stimulus program before the end of the year. Meanwhile, traders remain cautious ahead of key US data this week that could provide some clarity about the Fed`s outlook.

Spot gold was down 0.49% at $1,247.24 an ounce at 02:01 EST today, compared with Friday's close at $1,253.35.

The US economic digest for this week includes the infamous jobs report, third-quarter Gross Domestic Product (GDP) and manufacturing Institute for Supply Management's (ISM) report, with analysts calling for the following median forecast:

- ISM Manufacturing (Nov) 55.1 vs. 56.4

- Annualized GDP (QoQ)(3Q S) 3.1% vs. 2.8%

- Change in Non-farm Payrolls (Nov) 183K vs. 204K

The ISM report, which has been showing very solid monthly growth, is expected to show modest improvement for November. On the other hand, analysts expect US economic growth for the third quarter will be revised higher, assuming Washington's political stalemate does not result in more sudden backfires against the current gradual improvement.

Friday's US employment data is the biggest market-moving indicator this week, while analysts predict the US added fewer non-farm payrolls in November, compared with October's surprising figure that fueled concerns that Fed would start tapering its monthly $85 billion quantitative easing soon, perhaps by the end of the end of the year.

Gold outlook is still dominated by bearish bets in the view of the apparent improvement in the US economy. Technically, prices managed to break the descending resistance for the latest bearish wave, consolidating above the retracement level for the wave from $1,180 to $1,433.

Accordingly, a break above $1,258 minor swing high should confirm a bullish rebound accordingly, while settling below $1,234 with a daily closing may negate the rebound scenario, and hint potential further downside, towards $1,210.00.