Investing.com - Gold futures traded at the lowest level since early January on Wednesday, holding on to steep losses as investors continued to asses the strength of the U.S. economy amid reduced expectations for further easing.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,622.35 a troy ounce during U.S. morning trade, plunging 2.92%.
It earlier fell by as much as 3.15% to trade at USD1,619.05 a troy ounce, the lowest since January 10.
Gold futures were likely to find short-term support at USD1,606.05 a troy ounce, the low from January 9 and resistance at USD1,682.65, Tuesday’s high.
Gold prices fell to the lowest levels of the day after payroll processing firm ADP said in a report that non-farm private employment rose by 209,000 in March, beating expectations for an increase of 200,000.
The upbeat employment data further dampened hopes for monetary easing in the U.S.
A separate report from the U.S. Institute of Supply Management said that service sector activity in the U.S. fell more-than-expected in March, but expanded for the 27th consecutive month.
Also Wednesday, the European Central Bank left its benchmark interest unchanged at 1.00%, in a widely expected decision.
Following the decision, ECB President Mario Draghi said that growth has “stabilized at low levels” and that a moderate recovery is expected in course of the year.
Some technical selling also weighed after prices fell below a key support level close to USD1,625.15, triggering fresh sell orders and indicating a downward momentum in prices.
Gold prices were already on the defensive after minutes from the March meeting of the Federal Reserve's Open Market Committee indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U.S. economy in the near term.
At the meeting, only a couple of members suggested that more “quantitative easing” as the policy is commonly known could become necessary if the economy lost momentum.
At the previous policy meeting in January, a “few” Fed members thought the central bank could start adding more long-term securities before long and “a number of participants” indicated they were open to the idea if the economic outlook deteriorated.
There was apparently no discussion at the meeting of any new form of quantitative easing. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Stock markets, commodities and growth-linked currencies all came under pressure, while the dollar spiked higher.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.63% to trade at 80.03, the highest since March 22.
Gold prices dropped almost 5% in the three sessions following March’s Fed meeting after the central bank gave an upbeat assessment of the U.S. economy, which reduced expectations for a third round of monetary easing in the U.S.
However, but recent comments from Fed Chairman Ben Bernanke saw expectations for further stimulus rise again.
Later this week, attention will turn to U.S. non-farm payrolls data, which could shed further light on the strength of the U.S. economy and the need for further monetary easing in the U.S.
Also weighing on sentiment, Spain’s Treasury auctioned EUR2.59 billon of government bonds, short of the maximum targeted amount of EUR3.5 billion, in the country’s first debt auction since last week’s austerity budget.
Following the auction, the yield on Spanish 10-year bonds climbed to 5.7%, up from 5.5% before the sale.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears over the fiscal health of the region’s fourth largest economy.
On Tuesday, Spain’s government announced that the country’s public debt will rise to a record 79.8% of gross domestic product this year.
Elsewhere on the Comex, silver for May delivery plummeted 5.3% to trade at USD31.49 a troy ounce, while copper for May delivery plunged 2.4% to trade at USD3.826 a pound.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery traded at USD1,622.35 a troy ounce during U.S. morning trade, plunging 2.92%.
It earlier fell by as much as 3.15% to trade at USD1,619.05 a troy ounce, the lowest since January 10.
Gold futures were likely to find short-term support at USD1,606.05 a troy ounce, the low from January 9 and resistance at USD1,682.65, Tuesday’s high.
Gold prices fell to the lowest levels of the day after payroll processing firm ADP said in a report that non-farm private employment rose by 209,000 in March, beating expectations for an increase of 200,000.
The upbeat employment data further dampened hopes for monetary easing in the U.S.
A separate report from the U.S. Institute of Supply Management said that service sector activity in the U.S. fell more-than-expected in March, but expanded for the 27th consecutive month.
Also Wednesday, the European Central Bank left its benchmark interest unchanged at 1.00%, in a widely expected decision.
Following the decision, ECB President Mario Draghi said that growth has “stabilized at low levels” and that a moderate recovery is expected in course of the year.
Some technical selling also weighed after prices fell below a key support level close to USD1,625.15, triggering fresh sell orders and indicating a downward momentum in prices.
Gold prices were already on the defensive after minutes from the March meeting of the Federal Reserve's Open Market Committee indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U.S. economy in the near term.
At the meeting, only a couple of members suggested that more “quantitative easing” as the policy is commonly known could become necessary if the economy lost momentum.
At the previous policy meeting in January, a “few” Fed members thought the central bank could start adding more long-term securities before long and “a number of participants” indicated they were open to the idea if the economic outlook deteriorated.
There was apparently no discussion at the meeting of any new form of quantitative easing. Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Stock markets, commodities and growth-linked currencies all came under pressure, while the dollar spiked higher.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.63% to trade at 80.03, the highest since March 22.
Gold prices dropped almost 5% in the three sessions following March’s Fed meeting after the central bank gave an upbeat assessment of the U.S. economy, which reduced expectations for a third round of monetary easing in the U.S.
However, but recent comments from Fed Chairman Ben Bernanke saw expectations for further stimulus rise again.
Later this week, attention will turn to U.S. non-farm payrolls data, which could shed further light on the strength of the U.S. economy and the need for further monetary easing in the U.S.
Also weighing on sentiment, Spain’s Treasury auctioned EUR2.59 billon of government bonds, short of the maximum targeted amount of EUR3.5 billion, in the country’s first debt auction since last week’s austerity budget.
Following the auction, the yield on Spanish 10-year bonds climbed to 5.7%, up from 5.5% before the sale.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears over the fiscal health of the region’s fourth largest economy.
On Tuesday, Spain’s government announced that the country’s public debt will rise to a record 79.8% of gross domestic product this year.
Elsewhere on the Comex, silver for May delivery plummeted 5.3% to trade at USD31.49 a troy ounce, while copper for May delivery plunged 2.4% to trade at USD3.826 a pound.