Gold Spot Price: Gold Drops on Strong US Jobs Data

By:
on Sep 5, 2013
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iNVEZZ.com, Thursday, September 5: Gold price today edged lower as US jobs data signalled that the labour market in the country is improving, increasing the likelihood of early tapering of the Fed’s bullion-friendly bond-buying programme. Investors are now awaiting US non-farm payroll figures due to be released tomorrow. Gold managed to erase some of yesterday’s losses, climbing to 1,395.10 an ounce by 11:34 GMT, but since then has retreated to below $1,380.

**Jobs data**
US jobless claims declined by 9,000 to 323,000 in the week ended August 31, below the bottom end of the estimate of economists surveyed by Bloomberg, the Labour Department said today. The median forecast of 50 economists surveyed by Bloomberg was for jobless claims of 330,000, while estimates ranged from 325,000 to 345,000. Another report showed that productivity increased more than previously estimated in the second quarter of the year.

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Gold Spot Price Down on Speculation over QE Tapering Gold Spot Price: Rebounding after Earlier Losses

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Meanwhile, US-based ADP Research Institute today released a report showing that companies last month boosted payrolls by 176,000 workers. The figure was lower than the 184,000 median estimate of 43 analysts surveyed by Bloomberg. Analysts had projected an increase in the range from 150,000 to 225,000.

Gold price plunged in afternoon trading and could be found at $1,370.20 as of 15:45 BST. Bullion last week reached its highest price in more than two months at $1,433.31 an ounce as speculation of an imminent military strike against Syria stoked demand for havens.
**Stimulus tapering**
!m[US Labour Market Improving Faster than Expected](/uploads/story/5309/thumbs/pic1_inline.jpg)

Investors are expecting US jobs data on Friday, looking for clues when the Fed will start trimming its monetary stimulus programme known as quantitative easing. The Fed gave signals in June that it might start tapering the programme amid increasing signs of improvement in the US economy. This prompted a sharp decline in the gold price, which sank as low as $1,180 per ounce. The metal has managed to recover since as tapering concerns eased, but recent strong US economic data has revived expectations that the Fed might scale back stimulus at its September 17-18 policy meeting.

The Federal Reserve is currently buying $85 billion worth of debt every month and that programme has been one of the biggest drivers for the gold price in recent years as it maintains pressure on interest rates while stoking fears over inflation, thus boosting the metal’s safe haven appeal. A reduction in debt purchases would hurt gold prices.

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