Gold takes a dive as sales data point to imminent Fed stimulus tapering

Shutterstock photo - Gold prices plummeted on Thursday after better-than-expected U.S. retail sales figures sparked market expectations for the Federal Reserve to announce plans to taper its USD85 billion in monthly asset purchases, possibly as early as next week.

Bond purchases seek to boost recovery by pushing down interest rates, weakening the dollar in the process and making gold an attractive hedge.

On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,226.50 during U.S. afternoon hours, down 2.44%.

Gold prices hit a session low of USD1,224.40 a troy ounce and high of USD1,256.50 a troy ounce.

Gold futures were likely to find support at USD1,211.20 a troy ounce, Friday's low, and resistance at USD1,267.30, Tuesday's high.

The February contract settled down 0.31% at USD1,257.20 a troy ounce on Wednesday.

The Commerce Department reported earlier that U.S. retail sales rose 0.7% in November, beating market expectations for a 0.6% increase. Core retail sales, which are stripped of automobiles, rose 0.4%, above forecasts for a 0.2% increase.

The data kept expectations alive that the Federal Reserve will soon decide to taper its USD85 billion in monthly bond purchases, possibly at Dec. 17-18 policy meeting.

Monthly bond purchases have supported gold prices for over a year.

Elsewhere, the U.S. Department of Labor said the number of individuals filing for initial jobless claims assistance last week rose to a two-month high of 368,000, far surpassing expectations for an increase to 320,000 from the previous week's revised total of 300,000.

Markets shrugged off the news, attributing the increase to holiday volatility typical this time of year, while a budget deal underway in the U.S. Congress also sent gold falling amid sentiments that fiscal uncertainties may fade and further convince the Fed the economy is in less need of monetary support.

Elsewhere on the Comex, silver for March delivery was down 4.48% at USD19.445 a troy ounce, while copper for March delivery was up 0.05% and trading at USD3.297 a pound. offers an extensive set of professional tools for the financial markets.

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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.

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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