Gold Stuck At 6-Month Low After Late-Night Rout

Gold held ground early Friday after falling to the lowest in six months late yesterday on the selloff that was triggered by the Federal Reserve`s decision to start curbing its bond purchasing program.

The bullion market has suffered a lot already; with gold close enough to post its biggest annual loss in more than 30 years. The sentiment is down here and the precious metal has lost more than 3% of its value since the Fed announced a $10 billion cut in its stimulus plan. On the physical front, weaker demand from China continues to signal prices are set to extend that slump.

Spot Gold was up 0.23% at $1,192.60 an ounce as of 08:23 am GMT, nearly off the six-month low at $1,187.13 hit late Thursday. The day`s range is far between $1,186.10 and $1,197.35.

Global markets are trying to adapt to the Fed`s being less easy than ever, although the central bank sought to reassure the market by stressing that it would keep borrowing costs low for a long period of time.

Fed stimulus was good for gold, keeping short-term rates low and lowering the opportunity cost of owning the metal. But with tapering soon to kick off, fears mounted the metal will lose further value if the US central bank reduces liquidity to diminish the risk of inflation.

Unfortunately, the dramatic reaction in the gold market was so evident some hours ago amid the Fed-inspired selloff, but now participants will be watching key data from the world`s largest economy to better digest the central bank`s historical announcement.

On the market watch, the final revision to the third-quarter GDP will be out at 08:30 a.m. GMT today, and will put inventories back to the spot light, and perhaps an unwanted build is holding down fourth-quarter growth.

The bearish wave extends in the year-end trade approaching the major technical low at $1,180, although the sideway move suggest a rebound is quite possible if the US GDP report proves the Fed`s wrong about its early reduction in stimulus, however the downside move will likely push price towards an imminent retest of that level.