Gold futures pare weekly decline ahead of U.S. employment data

Gold rebounded from Thursdays three-week low on Friday on expectations todays U.S. employment data will show employers added fewer jobs in October from a month earlier, curbing speculations the Federal Reserve will trim its monetary easing program earlier than expected. Silver, platinum and palladium tracked the yellow metals upward momentum.

On the Comex division of the New York Mercantile Exchange, gold futures for settlement in December traded at $1 310.60 per troy ounce at 9:28 GMT, up 0.16% on the day. Prices held in a narrow range between $1 312.50 and $1 305.90 an ounce. The precious metal fell to a three-week low of $1 296.90 an ounce on Thursday and settled the day 0.6% lower but pared its weekly decline to 0.4% on Friday.

Gold tumbled on Thursday after a preliminary reading showed the U.S. economy expanded at a much faster pace in the third quarter than previously expected and exceeded the previous three months’ growth. Data by the Commerce Department showed U.S. GDP (Gross Domestic Product) growth surged 2.8% in the three months trough September, the most in a year, defying analysts’ projections for a drop to 2% from the preceding quarter’s 2.5% expansion.

The upbeat reading fueled further speculations for an earlier-than-expected deceleration of Fed’s monetary stimulus program after a recent string of upbeat data. The precious metal has been tracking shifting expectations of Feds tapering timetable throughout the year and has lost more than 21% so far, set for the first annual decline in 13 years. A reduction of Feds bond purchases would reduce the supply of dollars in the economy, strengthening the currency and pushing down dollar-denominated commodities.

The U.S. dollar index, which measures the greenback’s performance against a basket of six major peers, traded at 80.97 at 9:27 GMT, up 0.08% on the day. Prices held in range between 81.03 and 80.90. The December contract surged to a 2-1/2-month high of 81.55 on Thursday and settled the day 0.4% higher following ECB’s decision to cut the Euro zone’s refinancing rate and the release U.S. GDP numbers.

However, a smaller-than-projected expansion in U.S. consumer spending suggested an underlying loss of momentum, which partially offset the upbeat GDP data. Personal Consumption Expenditures grew by 1.5% in the third quarter, underperforming expectations for a decrease to 1.6% from the preceding period’s 1.8%. Meanwhile, at 1.4%, core consumer spending advanced at a faster pace than the second quarter’s 0.6% but trailed expectations for a surge by 1.5%.

Market players are awaiting the release of crucial employment data later on Friday. U.S. non-farm payrolls are expected to have risen by 125 000 in October, down from 148 000 in September, while the unemployment rate is projected to have inched up to 7.3% from 7.2% a month earlier.

Analysts at Australia & New Zealand Banking Group Ltd. including Victor Thianpiriya wrote in a note today, cited by Bloomberg: “We expect relatively subdued trading today around the current level of $1,309 an ounce until closer to the non-farm payrolls. A print above the market’s median expectation of 120,000 will likely see expectations for Fed tapering pulled forward from the first quarter next year.”

Average Hourly Earnings are expected to have advanced by 0.2% with Average Weekly Hours remaining at 34.5 hours. American households’ income is expected to have risen at a slower pace in September from a month earlier, resulting in a smaller expansion in personal spending.

Core Personal Consumption Expenditures are projected to have risen by a mere 0.1% in September, while core consumer spending rose at a faster pace compared to August. Finally, the preliminary reading of the Thomson Reuters/University of Michigan Consumer Sentiment Index is expected to show a rebound to 74.5 in November after slumping to 73.2 in October.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, remained unchanged for a second day at 868.42 tons, near the lowest since the beginning of 2009, data on the web site showed.

Elsewhere on the precious metals market, silver futures for settlement in December traded at $21.668 per troy ounce at 9:21 GMT, up 0.18% on the day. The contract shifted in a days range between $21.773 and $21.623 and is down 0.8% on the week so far. Platinum for delivery in January rose by 0.15% to $1 459.05 per troy ounce and held in range between $1 461.20 and $1 451.30 an ounce. Palladium December futures traded at $762.60 an ounce, up 0.45% on the day. The contract surged to session high of $764.30, near Wednesdays three-month high of $765.00, and extended its weekly advance to over 2.9%.