Gold erases partially earlier session gains following U.S. data

Gold pared some of its earlier gains following todays upbeat U.S. economic data, which offset yesterdays disappointing Q1 GDP growth final reading and supported Feds intention to scale back its monetary easing program.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at $1 233.15 per troy ounce at 13:54 GMT, up 0.27% for the day. The precious metal touched a days low of $1 223.55 earlier in the day, hovering slightly above Wednesdays bottom of $1 221.55, which was the lowest level since August 2010. Days high stood at $1 244.15 an ounce earlier in the session, 1.1% up on the day. Gold settled yesterday with a major loss, shedding 3.62% off its value after marking a 6.8% weekly lost last week.

Georgette Boele, a commodities strategist at ABN Amro Group NV in Amsterdam said for Bloomberg earlier in the day: “Gold very much depends on the U.S. data in the near term. If the data comes better than expected, the pressure will increase on gold.”

The Department of Labor released data at 10:30 GMT, according to which Initial Jobless Claims mismatched projections of a 10 000 decrease by 1 000. The number of people who filed for unemployment assistance in the U.S. last week fell to a seasonally adjusted 346 000, compared to the previous periods 355 000 revised reading, but slightly above projections of 345 000. Personal Income for May surpassed expectations of 0.2% and surged to 0.5%, up from Aprils revised 0.1% figure. Personal Spending for May met anticipations at 0.3%, well above the preceding months revised reading of -0.3%. Core PCE (Core Personal Consumption Expenditures) met projections both on monthly and annual basis. Core PCE for May stood at 0.1%, up from Aprils 0.0% and was 1.1% higher than May 2012.

The positive readings of the indicators offset yesterdays disappointing U.S. data, supporting Feds intention to wind down its bond purchasing program. Gold has lost 22% since the start of April and is headed for a record quarterly loss. The precious metal has largely been tracking shifting speculation about a premature deceleration of Fed’s monetary stimulus. Gold’s bearish sentiment remains intact after last week’s inflation data and Ben Bernanke’s statement. The Fed Chairman stated the central bank will most probably wind down its bond purchasing program during the second half of the year and bring it to an end by mid-2014, if stable recovery signs are provided and meet projections. Last week data showed that Core CPI, which excludes the more volatile energy and food prices, rose only by 0.2% in May, compared to 0.1% in April and met projections. On an annual basis Core Consumer Price Index also met expectations and remained the same compared to May 2012 at 1.7%. CPI for May was even lower than anticipated and stood at 0.1%, below forecasts for a 0.2% increase.

Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said yesterday by phone for Bloomberg: “Gold and precious metals are out of favor. If there’s something indicating an end to bond buying, then investors turn more negative. Some investors see the knife falling and think it might fall further, so may delay any purchases.”

Elsewhere on the precious metals market, silver, platinum and palladium also erased some earlier gains, but are still marking a significant advance. Silver for September delivery gained 0.87% on the day by 13:49 GMT, trading at $18.775 an ounce. Prices ranged between days high and low at $18.950 and $19.455 respectively. Silver is considered as the worst performing metal and has dropped 38% this year, hitting a lowest level since August 2010 yesterday. Silver dropped 34% this quarter alone.

Meanwhile, platinum October futures were up 1.15% on the day at 13:50 GMT. The metal traded at $1 322.45 an ounce, varying between days high and low at $1 330.65 and $1 302.75. The precious metal fell 16% this quarter.

Palladium for September delivery stood at $643.90 an ounce at 13:52 GMT, up 1.68% on the day. Prices ranged between daily high and low at $645.70 and $630.30 respectively. The metal has lost 17% of its value since April.