Morning Gold: Gold Lower on Fresh Data Awaited

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(Reuters) – On Monday, gold held above $1,300 an ounce, but came under pressure as the dollar stabilized after mixed U.S. data last week made investors not sure that the Federal Reserve would begin to scale back its stimulus next month.

At the beginning of last week, strong U.S. factory figures and GDP led to losses in gold of about 3.5%. Yet, prices recovered after data showed U.S. employers had lowered their pace of hiring, which crushed prospects that the Fed will begin tapering its bond-buying as early as September.

Spot gold decreased 0.2% to reach $1,309.00 an ounce by 1152 GMT. December U.S. gold futures also dropped $2.10 to reach $1,308.30 an ounce.

Societe Generale analyst Robin Bhar said “We had a good rally on Friday that seems to have stalled now as the timetable for tapering remains unclear and obviously investors will be watching the data that is coming through now for clearer direction,” he added “It is positive that gold is holding above $1,300 and obviously the dollar is still relatively weak on the broad dollar index, but I wouldn’t be so convinced by the rally unless some of the U.S. data comes in weak,”

The London A.M. fix is at $1,311.00.

The dollar strengthened against the euro and the yen. European shares rose to a two-month high and benchmark U.S. Treasury yields declined to 2.6%, under July’s two-year high of 2.755% but remained higher than at the beginning of the year.

The earnings from U.S. bonds are carefully examined by market participants.

In latest weeks, the Fed has said it would start tapering its $85 billion monthly bond purchases if the U.S. economic recovered and retained momentum, encouraging investors to closely watch jobs data and housing.

The upcoming data the market will carefully watch is the U.S. ISM non-manufacturing PMI.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded (ETF) fund, holdings dropped 0.26% to reach 918.64 tons on Friday, touching a new four-year low.