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Gold futures ended Friday’s session at a two-week low, after stronger-than-expected U.S. economic data fuelled speculation that the Federal Reserve may start tapering stimulus sooner-than-expected.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery slumped 0.79% on Friday to settle the week at USD1,313.20 a troy ounce.
Comex gold prices fell to a session low of USD1,305.60 a troy ounce earlier in the day, the weakest level since October 17.
The December contract tumbled 1.9% on Thursday to settle at USD1,323.70 a troy ounce as investors liquidated their long positions amid uncertainty surrounding the Fed's stimulus program.
Gold futures were likely to find support at USD1,273.80 a troy ounce, the low from October 17 and resistance at USD1,359.40, the high from October 30.
On the week, the precious metal lost 2.9%, the largest weekly decline in seven weeks.
The Institute of Supply Management said Friday that its manufacturing purchasing managers’ index rose to 56.4 in October, the highest since April 2011, from 56.2 in September. Economists had expected the index to tick down to 55.0.
The upbeat data fuelled speculation that the Fed may start tapering its USD85-billion-a-month bond-buying program as soon as next month, after the central bank sounded more optimistic than anticipated in its assessment of the economy on Wednesday.
Fed officials stuck to the view that the economy is expanding "at a moderate pace" and said downside risks were diminishing, sparking speculation the central bank could start tapering stimulus at its December meeting.
The U.S. dollar strengthened as traders reassessed their expectations regarding the duration of the Fed’s bond-buying program.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, rose 0.6% on Friday to settle the week at 80.80, the strongest level since September 18.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
Gold traders now looked ahead to the release of key U.S. economic data later in the week ahead to help assess the timing for a reduction in the Fed’s bond-purchasing program.
Market players have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to scale back stimulus.
On Friday the U.S. is to release the nonfarm payrolls report for October. The U.S. is also to release preliminary data on third quarter economic growth on Thursday.
Gold prices are down approximately 22% this year on concerns the Fed would begin cutting back its easy-money policy by trimming its USD85 billion monthly bond purchases.
Elsewhere on the Comex, silver for December delivery dipped 0.14% on Friday to settle the week at USD21.83 a troy ounce, the lowest since October 17. Silver prices settled 4.86% lower at USD21.86 on Thursday.
On the week, silver future prices lost 3.53%, reversing two consecutive weekly gains.
Meanwhile, copper for December delivery inched down 0.06% on Friday to close the week at USD3.298 a pound. On Thursday, copper futures shed 0.75% to settle at USD3.300 a pound.
Prices of the red metal advanced 0.87% on the week, as upbeat Chinese manufacturing data boosted speculation demand from the world’s largest copper consumer will improve.
Copper traders often use manufacturing numbers as indicators for future copper demand growth, as the industrial metal is widely used by the sector. - investing.com
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