By Sara Sjolin and Carla Mozee, MarketWatch
LONDON (MarketWatch) — Gold futures extended losses on Thursday after being yanked down more than 1% the previous day, on reinforced worries about monetary-stimulus tapering by the Federal Reserve.
Gold for August delivery GCQ3 -0.61% dropped $9, or 0.7%, to $1,310.50 an ounce.
December gold GCZ3 -0.63% , also among the most-active contracts, shaved of $9.10, or 0.7%, to $1,311 an ounce.
The August and December gold contracts on Wednesday had each dropped by 1.1% on the Comex division of the New York Mercantile Exchange.
The declines came as stronger-than-expected figures on July U.S. manufacturing activity and June new U.S. home sales highlighted the view that the Fed will reduce the flow of monetary stimulus to the economy if this continues to improve in line with its projections.
Monetary stimulus by the Fed and other central banks has been credited for helping drive gold prices higher in recent years.
“As ever, bullion remains sensitive to U.S. macro numbers, while the QE3 guessing game continues,” said Andrey Kryuchenkov, analyst at VTB Capital.
“The U.S. economy is getting back on track, which threatens bullion’s safe-haven status, as investors choose riskier assets. At the same time, expectations of rising currency yields would boost the opportunity cost for gold, as long as the Fed stays ahead of the curve and carefully manages inflation expectations,” he added.
Wednesday’s losses for gold, tracking the most-active contracts, marked the largest one-day percentage and dollar drops since July 5, according to FactSet data.
The metals market will have fresh data to assess on Thursday. Economists polled by MarketWatch expect new orders for U.S. durable goods to rise 2.3% in June, led by demand in aircraft, and weekly claims for U.S. unemployment benefits to rise back up to 342,000.
Meanwhile, September copper futures HGU3 -0.82% slipped 2 cents to $3.16 a pound on Thursday. The prior day, copper prices fell 0.6% in the wake of a lower-than-anticipated reading for July manufacturing activity in China, though they briefly turned higher during the session.
Standard Bank commodity strategist Leon Westgate wrote that the action was “perhaps an indication of how short the copper market is that the weak economic data overnight from China failed to trigger a sharper selloff.”
After the manufacturing data, China’s cabinet late Wednesday said it would cut taxes for small businesses, seek to aid some exporters and increase state investment in railways. Read about Thursday's action in Asia Markets.
“For the moment, however, it looks like copper is in a bit of no-man’s land, with participants looking for a more sustained short-covering rally running into fresh selling activity from participants looking at what appears to be a deteriorating economic picture from China,” Westgate said.
In other moves Thursday, September silver SIU3 -1.05% fell 20 cents, or 1%, to $19.82 an ounce, while October platinum PLV3 -1.73% dropped $23.70, or 1.6%, to $1,431.50 an ounce.
September palladium PAU3 -1.27% shaved off $7.80, or 1%, to trade at $737.50 an ounce.
