Gold retreats on U.S. data

Gold pared its weekly advance, snapping two days of gains, as upbeat U.S. data on Thursday spurred speculation for Fed tapering at FOMCs next meeting. Silver, platinum and palladium also fell.

On the Comex division of the New York Mercantile Exchange, gold futures for delivery in December fell by 1.05% to $1 355.00 per troy ounce at 8:05 GMT. Prices held in range between days high and low of $1 368.40 and $1 354.10 an ounce respectively. The precious metal rose 4.7% on Wednesday after the FOMC decided to keep bond purchases intact, but trimmed its weekly advance to 2.1% following Fridays decline.

Gold prices edged lower on Friday following Thursdays upbeat U.S. data, which added to sentiment for an improving U.S. economy and boosted speculation that the Federal Reserve may pare its monetary stimulus at FOMCs next meeting. Initially, gold remained fairly unchanged following the release of the data yesterday as policy makers surprising decision on Wednesday still weighed on market sentiment.

The U.S. Department of Labor reported on Thursday that the number of people who filed for initial jobless payments last week rose by 15 000 to a seasonally adjusted 309 000. However, claims data were thrown into disarray last week after computer systems in two states, California and Nevada, were undergoing an update and failed to process some of the filed claims. This led to a sharp decline in last week’s reading to 290 000 claims filed. A Department of Labor analyst said that the two states are still working through the backlog, which could take a week or two and may have led to a further inaccurate drop in this week’s reading.

If considered as exact, the data showed a consistent increase in hiring, which would make the Fed more comfortable in trimming its bond buying program at the next FOMC meeting in December. The four-week average, which irons out weekly volatility, stood at 314 750 claims and was 5% below August’s reading.

Data by the Commerce Department showed that the U.S. current account deficit in the second quarter fell to $98.89 billion, the lowest since 2009. Market analysts expected a decrease to $96.30 billion from the preceding quarter’s $104.90 billion deficit. The gap narrowed down to 2.4% of the Gross Domestic Product and reached the lowest ratio since 1998. The biggest part in the decrease a had surge in exports, which rose by 0.9% in the months from April to June.

A separate report by the National Association of Realtors said that existing home sales in the U.S. rose to a 6 1/2-year high of 5.48 million in August, indicating persistent recovery in the housing market. The reading was the strognest since February 2007 and defied market analysts’ projections for a drop to 5.25 million from July’s 5.39 million homes sold.

Meanwhile, data also showed that the Philadelphia FED Index, which tracks the manufacturing activity in the region, exceeded economists’ projections for a surge to 10.0 from July’s 9.3 and rose to 22.3. At the same time, the U.S. Leading Indicators index also surpassed expectations for a 0.6% advance and rose by 0.7% in August after adding 0.6% in the preceding month.

Howard Wen, an analyst at HSBC Securities (USA) Inc., wrote in a note: “Bullion was weighed down by the release of better-than-expected U.S. economic data. The Fed tapering decision is no longer a surprise and we wonder how much more traction the gold market can get from the Fed decision.”

Elsewhere on the precious metals market, silver, platinum and palladium tracked golds downward direction. Silver futures for delivery in December fell by 2.61% to $22.685 per troy ounce at 8:02 GMT. Prices ranged between days high and low of $23.173 and $22.675 an ounce. Platinum for delivery in October traded at $1 452.50 an ounce, down 1.39% on the day, and held in days range between $1 467.65 and $1 452.30. Palladium December futures slipped 1.53% to $726.90 an ounce and varied between days high and low of $738.40 and $725.80 an ounce.