Gold futures drop to end at 4-month low

SAN FRANCISCO, MarketWatch (22/11) — Gold futures fell on Thursday and tallied a two-session loss of more than 2%, pressured by mostly upbeat U.S. economic data and hints that the Federal Reserve will decide to taper its gold-supportive stimulus program at one of their next few meetings.

Gold for December delivery dropped $14.40, or 1.1%, to settle at $1,243.60 an ounce on the New York Mercantile Exchange. On Wednesday, prices lost 1.2% to close at their lowest level since July 10, and on Thursday they marked their lowest settlement since July 8, according to FactSet data tracking the most-active contracts. The Labor Department reported Thursday that jobless claims fell by 21,000 to 323,000 in the week ended Nov. 16, with the data much better than expected. A separate report showed the lack of inflationary pressure in the economy, with U.S. wholesale prices dropping a seasonally adjusted 0.2% in October, marking the second straight decline. Gold is generally seen as a hedge against inflation and as a safe-haven asset, so upbeat economic data tend to weigh on prices for the precious metal. But the Philadelphia Fed’s manufacturing survey saw its lowest reading since May. The minutes from the Federal Reserve’s October policy meeting, released after the Comex close on Wednesday, had pressured gold prices in electronic trading. The minutes showed that Fed officials were looking for ways to exit or at least scale back the central bank’s $85 billion in monthly bond purchases, a program that has buoyed gold prices. The minutes were “deemed somewhat hawkish by the market place,” said Jim Wyckoff, senior analyst at Kitco.com, in a daily note. “Several members of the committee said at their October meeting they could see the Fed tapering its $85 billion-a-month bond-buying program at ‘one of its next few meetings.’” But “there is still a large contingent of market watchers who said the latest FOMC minutes revealed not much new and said any Fed tapering move will first have to see better U.S. jobs data,” he said. Meanwhile, Bank of America Merrill Lynch said Thursday that its bullish view on gold has been “proven incorrect.” It had “gone long” on gold earlier this month. Also on Comex Thursday, December silver fell 12 cents, or 0.6%, to $19.93 an ounce. Prices saw their first settlement below $20 since Aug. 7, according to FactSet data tracking the most-active contracts. January platinum shed $7.90, or 0.6%, to $1.391.70 an ounce and December palladium edged down by 60 cents to $713.25 an ounce. High-grade copper for December delivery closed at $3.19 a pound, up 3 cents, or 1%. In the equities market, metals-mining stocks followed prices for gold lower. The Philadelphia Gold and Silver Index lost 1.1% and the NYSE Arca Gold Bugs index dipped 1.6%. The gold-backed SPDR Gold Trust exchange-traded fund saw its shares ease back by 0.1%, whiles shares in the iShares Silver Trust ETF rose 0.5%. http://www.marketwatch.com/story/golds-decline-deepens-after-fed-minutes-2013-11-21