Morning Gold: Steady Gold as Fed Tapering Worries

Gold & Dollar

(Reuters) – On Friday, Gold steadied near a 2-month high hit earlier this week, as investors required further clearness on the outlook for U.S. monetary policy.

Strong manufacturing data and U.S. jobs this week has put additional expectations that the Federal Reserve might be set to taper its bullion-friendly stimulus measures, but investors still looking for a better view on the scope and timing of any decreasing before placing fresh bets, analysts said.

Spot gold steadied at $1,375.01 an ounce by 1053 GMT. It was set to the end of the week to be bit changed after a near 5% gain last week. U.S. December gold futures for delivery increased $4.00 at $1,374.80 an ounce.

The London A.M. fix is $1,374.50.

Matt Turner, an analyst at Macquarie said “If the Fed is going to taper in September, that will be the binary event. It could have quite a big impact on gold,” he added “The next big event is the non-farm payrolls for September.”

Europe’s main stock markets were mainly steady by mid-morning, after Asia saw a positive end to a stiff week, while the dollar was as well flat against other major currencies.

Gold prices have dropped by nearly a fifth this year on the back of speculations that the Fed might rein in its $85 billion monthly bond-buying program nearly next month.

It said earlier in the year that the timing of the tapering would depend on the U.S. economic improvement, and mainly the jobs market, which has brought U.S. data issues into specific focus for gold traders.

Demand in India and China, the top consumers, has been restrained ahead of a peak festival and wedding seasons that starts next month.

Peter Fung, head of dealing at Hong Kong’s Wing Fung Precious Metals said “Once the summer is over, we will see consistent buying from September through the end of the year,”

Premiums in Hong Kong, a supplier of gold to China, have dropped around $4 an ounce over London spot prices as of Friday, dealers said, from $5 last week.