Gold settles lower after good ADP jobs data, but finds support after expected Fed decision on scaling back bond buying – News Couple
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Gold settles lower after good ADP jobs data, but finds support after expected Fed decision on scaling back bond buying


Gold settled lower on Wednesday after the ADP private sector jobs report saw a more-than-expected increase in employment, but found some support after the Federal Reserve announced plans to reduce its bond-buying program, as expected.

“Fed Jerome Powell has maintained its usual policy of being clear forward guidance for managing market expectations, in order to avoid surprising financial markets,” said George Melling Stanley, chief gold strategist at State Street Global Advisors.

“What everyone expected from the November meeting was a clear plan to cut back on bond purchases, which would likely lead to the termination of the current program by the middle of next year,” he said, adding that there were no surprises from the meeting.

Gold for December delivery GC00,
-0.89%

GCZ21,
-0.89%
It fell $25.50, or 1.4%, to settle at $1,763.90 an ounce on Comex ahead of the Fed news. In electronic trading after the announcement, prices were at $1,765.

In a statement shortly after the gold futures contract was settled, the central bank said it would reduce the pace of bond-buying by $15 billion per month, and was ready to make adjustments at that pace if “changes in the economic outlook warrant.”

The decision was widely expected. Economists said the Fed has indicated it will slow purchases at a pace of $15 billion per month — $10 billion in Treasury and $5 billion in MBS — starting in the middle of the month.

Adrian Ash, director of research at BullionVault, said the Fed had clearly signaled “the beginning of the end to its more than 4-month-long quantitative easing epidemic.” So like investors in all other asset classes, gold traders got a lot of notice that this was imminent.”

“Although the beginning of the tapering has provided headwinds for bullion prices as the November decision approaches, it hasn’t sparked any rush of exits,” Ash told MarketWatch.

Gold prices settled lower during the session after better than expected ADP data.

“Investors who were excited about the opportunity to attack gold got a thumbs up on Wednesday after the strong ADP jobs report,” Luqman Otunuga, director of market analysis at FXTM, told MarketWatch.

Privately-run US companies created 571,000 new jobs in October, according to an ADP survey. The increase in employment was greater than expected. Economists polled by the Wall Street Journal expected an increase of 395,000.

“The precious metal fell like a house of cards, cutting multiple levels of support like a hot knife through butter,” Otunuga said.

In other Comex transactions, December Silver SIZ21,
+ 0.33%
It fell 1.2 percent to end the session at $23.231 an ounce. Copper Dec HGZ21,
-0.15%
It fell 1% to $4.321 per pound.

Jan Platini PLF22,
-0.58%
It lost 1.6% to $1022.50 an ounce and PAZ21 palladium for the month of December,
-0.27%
It settled at $1,987.20 an ounce, down 1%.



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