Gold dips on profit-taking

  

          Gold prices traded lower during Thursday’s Asian session on what appears to be a bout of clear profit-taking after the yellow metal surged Wednesday as the ongoing US government shutdown forced traders to seek safety in the precious metal. 

Weak US economic data also contributed to the commodity’s rallies, as the selloff in the US dollar led to a gold price increase. The two assets are inversely correlated. 

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery fell 050% to USD1,314.10 per ounce in Asian trading Thursday. The December contract settled higher by 2.69% at USD1,320.70 per ounce on Wednesday. 

Gold futures were likely to find support at USD1,272.10 a troy ounce, the low from Aug. 7, and resistance at USD1,375.10, the high from Sept. 19.

On Capitol Hill, Republicans and Democrats are still butting heads and unable to come up with a budget plan, forcing the US government shutdown to extend to its second day. This caused the US dollar to lose its appeal as a safe-haven investment, pushing traders to flee to more stable assets such as gold. 

In US economic news out Thursday, the ADP employment report showed a weaker than expected reading of 166K, lower than the 177K estimate for September. The August figure suffered a downward revision from 176K to 159K, reflecting a downturn in hiring for the past quarter. 

Weak hiring data and the ongoing US government shutdown led traders to speculate that the Federal Reserve will keep stimulus measures in place for the month and possibly until the end of the year. This contributed to the dollar’s decline as lower returns for the currency are expected, boosting the inversely correlated gold in turn. 

Elsewhere, Comex silver for December delivery dropped 0.79% to USD21.725 per ounce while copper for December deliver fell 0.17% to USD3.309 per ounce. - investing.com