US Economic Flow Stings Gold Bulls Before Jobs Data

Gold prices extended its steep slide for the week early Wednesday as traders anticipate further signs of recovery from the world's largest economy ahead of Friday's employment report.

The precious metal is holding near its lowest mark since July amid growing speculation that US economic recovery would boost the case for the Fed to taper it monetary stimulus program as soon as this month, a move that would strip gold off its appeal as a hedge against inflation, when investors rush for safety and mostly shift their money to higher-yielding assets as stocks.

Spot Gold was down 0.43% at $1,218.10 an ounce as of a.m. 02:36 a.m. EST, compared with yesterday's close at $1,223.42.

The yellow metal hit its lowest level in five months yesterday in the wake of strong US manufacturing data. Meanwhile, traders are moving on the sidelines ahead of US GDP data non-farm payrolls scheduled later this week.

A busy calendar of economic fundamentals will be kicked off today in the US, where traders will be carefully watching ADP employment report, expected to show US private employers hired new 170 thousand jobs in November, up from 130 thousand added in the previous month.

That could be the strongest figure in five months. The report will be due at 08:15 a.m. EST. Separately, the non-manufacturing ISM also due today may signal continued expansion in the US services sector.

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.

The precious metal is poised to mark its first annual drop in 13 years. Although some experts suggest A December will be ruled out at the Fed's next policy meeting, a surprising twist in the government's payrolls data will strongly boost the case for tapering into 2014.