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Gold drops in U.S. trading as investors take profits

CommoditiesSep 28, 2012 01:31PM ET
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Investing.com - Gold prices dropped in U.S. trading on Friday after investors sold the precious metal for profits.

Gold hit a six-month high recently in wake of the Federal Reserve's decision to implement a third round of quantitative easing to stimulate the U.S. economy, which weakens gold's traditional hedge, the dollar.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were down 0.46% at USD1,772.35 a troy ounce, up from a session low of USD1,769.65 and down from a high of USD1,785.65 a troy ounce.

Gold futures were likely to test support at USD1,755.35 a troy ounce, Thursday's low, and resistance at USD1,785.65, the earlier high.

The U.S. Federal Reserve is currently running a third round of quantitative easing, a monetary stimulus tool that sees the U.S. central bank buy USD40 billion in mortgage-backed securities a month on an open-ended basis to spur recovery.

Such policy tools weaken the greenback and make gold an attractive hedge.

Investors sold the metal on Friday and snapped up nicely priced dollar positions on sentiment gold's rally was due for a breather.

Weak data out of the U.S. sent the metal falling on a stronger dollar as well.

In the U.S., the Chicago purchasing managers' index contracted for the first time since September 2009, dipping to seasonally adjusted 49.7 compared to 53.0 August.

Analysts had expected the Chicago PMI to remain unchanged at 53.0 in September.

The Thomson Reuters/University of Michigan's final index on consumer sentiment for September fell to a seasonally adjusted 78.3 from 79.2 in August.

Analysts had expected the index to fall to 79.0 in September.

Elsewhere on the Comex, silver for December delivery was down 0.26% and trading at USD34.575 a troy ounce, while copper for December delivery was up 0.24% and trading at USD3.753 a pound.









Gold drops in U.S. trading as investors take profits
 

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