Gold Awaiting Fed Signals Forecasted Lower

Gold traded below the highest price in more than a week in London as investors weighed the outlook for U.S. policy makers to continue reducing stimulus before raising interest rates.

Data released April 4 showed the U.S. economy added 192,000 jobs in March, compared with a 200,000 increase estimated by economists in a Bloomberg News survey. Gold climbed 1.3 percent that day, the most since March 12, reaching $1,306.84 an ounce, the highest since March 27.

Federal Reserve Chair Janet Yellen said last week that slack in labor markets showed accommodative policies will still be needed for some time, after signaling last month the Fed may end bond purchases in the second half of 2014 and increase rates six months after that.

“While the recent U.S. payroll data was just below forecasts, we believe the Federal Reserve will continue to scale back stimulus,” Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail. “With safe-haven demand risks weakening and the U.S. economy seemingly on track again, we anticipate the gold price to begin tracking lower.”

Bullion for immediate delivery fell 0.3 percent to $1,299.68 by 9:01 a.m. in London, according to Bloomberg generic pricing. Gold for June delivery lost 0.3 percent to $1,299.90 on the Comex in New York. Futures trading volume was 47 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza