Gold hovers below 3-month high as ECB, payrolls bring out bears

New York (July 3)  Gold slipped to trade below a three-month high on Thursday as investors reacted to stronger-than-expected U.S. growth and a central bank policy meeting, both of which hinted at tighter monetary policy.

The European Central Bank (ECB) policy meeting left euro zone interest rates unchanged, dampening bullion's allure as a shelter from loose monetary policy. Meanwhile, the U.S. economy created nearly 300,000 jobs last month, which sent the unemployment rate to 6.1 percent, its lowest in nearly 6 years.

Weaker-than-expected data and continued stimulus measures would have been supportive of safe-haven gold, typically seen as a hedge against inflation.

 Spot gold fell by about 1 percent to $1,316 an ounce after reaching a 3-month high of $1,332.10 hit earlier this week. Tensions in Iraq and Ukraine stoked safe-haven demand.

Other data on Wednesday showed that U.S. private-sector hiring hit a 1-1/2-year high in June, hurting gold.
The technical picture also looked weak with Reuters technical analyst saying gold may retrace to $1,316 as it has failed to break a resistance at $1,334 twice.

Meanwhile, physical demand for gold has been lackluster due to the recent rally in prices. In top buyer China, domestic prices were at a discount of $1-$2 an ounce to global prices, underscoring sluggish demand.

Among other precious metals, platinum was holding close to a 10-month high of $1,517.50 hit on Wednesday as supply worries persisted even after producers in South Africa resumed work after a five-month strike.

 Palladium was also supported near its highest in three weeks.

Source: CNBC