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Gold prices inch higher on short-covering; Fed taper fears limit gains

Published 12/09/2013, 03:21 AM
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Investing.com - Gold prices inched modestly higher on Monday, but gains were limited amid ongoing concerns the Federal Reserve will start tapering its bond-buying program at one of its next few meetings.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,230.90 a troy ounce during European morning trade, up 0.15%. Comex gold prices traded in a tight range between USD1,224.80 a troy ounce and USD1,231.70 a troy ounce.

The February contract settled 0.24% lower on Friday to end at USD1,229.00 a troy ounce.

Gold futures were likely to find near-term support at USD1,207.25 a troy ounce, the low from July 5 and resistance at USD1,251.50, the high from December 4.

Data released Friday showed that the U.S. economy added 203,000 jobs in November, above expectations for jobs growth of 180,000. The unemployment rate fell to a five-year low of 7.0% from 7.3% in October.

The robust data raised the possibility that the Fed may start to scale back its USD85 billion-a-month asset purchase program as soon as its next monthly meeting on December 17 - 18.

Investors looked ahead to key U.S. economic data later in the week to further gauge the strength of the economy and the need for stimulus.

Gold is down approximately 28% this year, heading for the first annual loss in 13 years, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.

Elsewhere on the Comex, silver for March delivery added 0.15% to trade at USD19.54 a troy ounce, while copper for March delivery shed 0.25% to trade at USD3.241 a pound.

Data released earlier showed that consumer price inflation in China rose 3% in November, in line with expectations and slowing from 3.2% in October.

The inflation report came one day after data showed that China’s trade surplus widened to USD33.8 billion last month from a surplus of USD31.1 billion in October, compared to estimates for a surplus of USD21.7 billion.  

Chinese exports climbed 12.7% from a year earlier, beating expectations for a 7.1% increase and following a 5.6% gain in October. Imports rose 5.3%, compared to forecasts for a 7.2% increase.

Market players now looked ahead to a raft of Chinese economic data later in the week, including reports on inflation, industrial production and retail sales.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

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