“We see further near-term pressure but only of a moderate extent on gold until equity markets pull back off record levels,” he said. Janet Yellen’s confirmation to head the Federal Reserve has likely been priced into the market in the near term and further economic news will impact the time table to begin tapering the central bank’s quantitative easing in 2014, said Wright.
A pullback in QE could provide support for the dollar, which in turn may pressure dollar-denominated gold prices.
On Monday, a gauge of U.S. home-builder confidence in November missed forecasts. Weaker-than-expected economic data tend to push back the timing expectations for a Fed taper.
“Investors are just reacting to incoming U.S. economic data releases from a tapering perspective and nothing else,” Chintan Karnani, chief market analyst at Insignia Consultants, said in an email from New Delhi.
Details on plans for economic reforms in China, among the world’s largest gold buyers, failed to provide much support, if any, for gold prices Monday. The Chinese government late last week announced detailed reform plans, with a 60-point list of policy tasks, tackling a wide range of issues from financial markets and state-owned enterprises to legal reforms and the one-child policy.
Barclays analysts noted that the latest Commodity Futures Trading Commission data, for the week ending Nov. 12 — a week showing stronger-than-expected payrolls data and a surprise rate cut by the European Central Bank — revealed that investors had scaled back gold exposure in what they described as “the most aggressive reduction in positioning since March 2012.”
