Gold at 1240 after Short Covering Rally

Gold edged lower on Thursday following a short-covering rally in the previous session, weighed down by concerns the U.S. Federal Reserve could soon begin tapering its monetary stimulus on strong economic data.

Bullion prices rose the most in over a month on Wednesday despite strong data on U.S. private-sector hiring and service industry growth in the run up to the nonfarm payroll data on Friday.

The short-covering gains came after gold hit fresh five-month lows for three straight sessions.  “The markets are still positioned quite short. There is going to be a bigger reaction to a weaker-than-expected nonfarm payrolls report than to stronger-than-expected numbers,” said Victor Thianpiriya, an analyst at ANZ.


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