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Gold falls on U.S. economic data, fiscal fears

CommoditiesNov 15, 2012 03:24PM ET
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Investing.com - Gold futures traded sharply lower during the U.S. afternoon session as data indicated the number of people who filed for unemployment assistance in the U.S. last week surged to the highest level since April 2011.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,714.65  a troy ounce during U.S. afternoon trade, down 0.89% on the session.

Prices fell by as much as 0.8% earlier in the day to hit a session low of USD1,715.85 a troy ounce, the weakest level since November 8.

Gold prices were likely to find near-term support at USD1,712.75 a troy ounce, the lowest November 8 and resistance at USD1,737.95, the high from November 11.

Concerns over the U.S. economic outlook resurfaced after official data showed that the number of individuals filing for initial jobless benefits in the week ending November 10 rose by 78,000 to a seasonally adjusted 439,000, compared to expectations for an increase of 14,000 to 375,000.

Continuing jobless claims in the week ended November 3 rose to 3.334 million, the highest level since July 2008.  Analysts had expected continuing claims to rise to 3.210 million from last week’s revised figure of 3.163 million.

In addition, data showed that consumer price inflation in the U.S. rose in line with expectations in October, while prices excluding food and energy costs increased more-than-expected.

A separate report showed that the New York Federal Reserve’s index of manufacturing conditions improved unexpectedly in November, but remained in contraction territory for the fourth consecutive month.

The disappointing data added to expectations the Federal Reserve will keep its loose monetary policy intact.

The Fed indicated in the minutes of its October policy meeting published Wednesday that it may need to expand its monthly purchases of bonds next year, after the expiration of a program to extend the maturities of assets on its balance sheet, known as Operation Twist. 

The discussion indicates that Fed officials judge the economy still needs record stimulus to reduce an unemployment rate stuck near 8%.

Investors also remained concerned over the looming “fiscal cliff” in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1. 

There are fears the U.S. economy will fall back into a recession, unless a divided Congress and the White House can work out a compromise before the January 1 deadline.

President Barack Obama is set to meet with congressional leaders on Friday to discuss the country’s fiscal situation. 

Elsewhere on the Comex, silver for December delivery plunged 1.13% to trade at USD32.51 a troy ounce, while copper for December delivery added 0.31% to trade at USD3.464 a pound.

Gold falls on U.S. economic data, fiscal fears

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Daniel Urencio
Daniel Urencio Nov 16, 2012 2:24AM GMT
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Interesting thing to claim that that given drop in the price of gold happened given the released data on jobless claims.. Any explanaition on what is the specific (either economic or speculative) relation between a proxy for unemployment and the price of gold? it would be nice to know given that the price of gold has been going down in recent days regardless of the kind of data that is released and the time it is released..
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