Gold slides back below $1,200/oz on Fed outlook

Thursday, October 30, 2014

Gold extended its decline today, shedding as much as 1.0% as spot prices pulled back towards $1,200/oz early on as Asian and European investors continued to digest the Fed’s comments yesterday. Prices were down 1.3% at the close yesterday on optimistic commentary from the FOMC, notably the outlook for the labour market and emphasis of US resilience to global growth concerns. The yellow metal is on track to post six sessions of lower closes out of the last seven sessions with prices losing as much as 3.6% since peaking towards $1,250/oz earlier in the month.

Economic data out today further reinforced the Fed’s economic outlook with advanced figures for Q3 GDP indicating the US economy grew more than expected, growing at an annualised rate of 3.5% q/q against expectations of 3.0% q/q. Personal consumption data for Q3 came in slightly below expectations, accelerating 1.8% q/q against expectations of a marginally higher 1.9% q/q increase. Initial weekly jobless claims added further support for the Fed’s labour market outlook, adding 287K new claims during the week ending October 25th which was only two thousand more than market participants polled by Bloomberg had expected.

European equity indices spent the majority of the session in negative territory despite macroeconomic data released this morning indicating economic confidence and industrial confidence in October were higher than expected, coming in at 100.7 and -5.1 against expectations of 99.7 and -5.5 respectively. However, consumer confidence was still somewhat pessimistic, holding firm m/m at -11.1 in October which dragged benchmark indices across the region lower. US equity indices got off to a positive start as investors shrugged of the bearish sentiment seen in the European session as both the S&P 500 and DJIA found firm support at the open with the DJIA trading 0.7% higher at the time of writing.  

Spot gold prices extended losses for a second session 

XAU Curncy Gold Spot Oz D 2014 10 30 15 30 46

US Q3 GDP improves to 3.5% q/q on an annualised basis

GDP CQOQ Index GDP US Chained 2 2014 10 30 12 54 00 

Topics: GDP, Gold, Employment, DXY
More from: Kash Kamal