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Gold prices inch higher after hitting lowest since July on Fed outlook

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Investing.com - Gold prices were modestly higher on Tuesday, as investors returned to the market to seek cheap valuations one day after futures fell to the lowest level since July.

Bearish sentiment on the precious metal has been growing recently amid mounting concerns that the Federal Reserve may begin to taper its bond-buying program sooner rather than later.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,224.30 a troy ounce during European morning trade, up 0.2%.

Comex gold prices held in a tight range between USD1,218.50 a troy ounce and USD1,225.40 a troy ounce.

The February contract plunged to USD1,217.10 a troy ounce on Monday, the lowest since July 8, before ending down 2.28% at USD1,221.90 a troy ounce.

Gold futures were likely to find support at USD1,207.25 a troy ounce, the low from July 5 and resistance at USD1,251.20, the high from December 2.

Monday's losses came after the Institute for Supply Management said that manufacturing activity in the U.S. expanded at the fastest rate since April 2011 in November.

The upbeat data reinforced expectations that the Fed will begin to reduce monetary stimulus at one of its next few meetings.

Investors looked ahead to key U.S. economic data later in the week to further gauge the strength of the economy and the need for stimulus.

The U.S. is to release data on third quarter gross domestic product on Thursday, while November's nonfarm payrolls report is scheduled for Friday.

The Federal Reserve, which holds its next meeting on December 17-18, has said the timing of its tapering depends on the health of the labor and housing markets.

Gold is down approximately 27% this year, heading for the first annual loss in 13 years, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.

Elsewhere on the Comex, silver for March delivery fell 0.1% to trade at USD19.27 a troy ounce, while copper for March delivery shed 0.5% to trade at USD3.167 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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