Gold slipped amid QE speculations

Gold slipped and circled around $1 396 an ounce as investors remained cautions ahead of key employment data, scheduled for Thursday and Friday. Prices rose 0.3% yesterday as the ADP Employment Change mismatched forecasts and showed a less than expected gain in hired workers, even though India announced it will widen its gold import restrictions to counter a record current account deficit.

U.S. Initial Jobless Claims, due at 12:30 GMT, are supposed to bring some preliminary data about the labour market in the world’s biggest economy. Later on Friday, Change in Non-Farm Payrolls, Average Hourly Earnings and the Unemployment Rate will shed some light on the health of the U.S. economy, thus dampening or sharpening expectations about Fed’s monetary stimulus program.

On the Comex division of the New York Mercantile Exchange, gold for August delivery traded at $1 396.85 at 7:00 GMT, down 0.12% on the day.

Gold pries were further pressured yesterday as news came out that India, the world’s biggest gold consumer, will widen curbs on imports. Goal is to narrow a record-wide current account deficit. India’s central bank, the Reserve Bank of India, will expand its import restrictions outside banks to include state-run trading companies and others, who are authorized to directly import gold.

India’s gold imports reached 162 tons last month, up from 142 in April. Restrictions should reduce that amount to 50-100 tons in June.

Feng Liang an analyst at GF Futures Co. in Guangzhou said for Bloomberg: “India is intent to curb gold demand as previous steps don’t seem to have worked. Whether or not the measures are successful, it does put a dampener on sentiment. The market will trade in a range as investors look to the jobs data for clues to the Fed’s next move.”

Gold fell 17% this year as investors largely lost faith in the precious metal as a safe haven for wealth preservation. Many hedge funds and private investors cut their positions in gold-backed ETPs, which caused the yellow metal to sink even further, leading to a record fall in April 15-16.

Lower gold prices, however, lured many central banks causing them to extend positions. Russia and Kazakhstan have been diversifying assets by buying gold after prices contracted with a record pace. The two countries have kept buying gold for a seventh straight month. Turkey is also on the list of countries, which have expanded their gold reserves. The nations holdings increased by 18,2 tons to 427,1 tons in April, a tenth straight month rise. Belarus’s reserves increased for a seventh month and Azerbaijan’s and Greece’s gained for a fourth month in a row.

Elsewhere on the market, other precious metals have been following golds direction. Platinum traded at $1 502,90 at 7:18 GMT, down 0.5% on the day. Palladium stood at $754 at 7:17 GMT, tumbling 0.35% for the day. Silver signed off 0,74% of its value an traded at $22.307 on ounce at 7:19 GMT.