By Saumya Vaishampayan and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) — Gold and silver futures fell modestly Monday as investors continued to react to last week’s economic data and expectations for an eventual slowing of the Federal Reserve’s monthly asset purchases.
The U.S. service sector expanded at a faster pace in July, with the Institute for Supply Management’s survey of purchasing managers rising to 56.0% from 52.2% in June. Economists had expected an increase to 53.1%, according to a MarketWatch poll.
Gold for December delivery GCZ3 -0.92% shed $4.30, or 0.3%, to $1,306.20 an ounce in electronic trade.
The monthly jobs data late last week came in weaker than expected for July, casting some doubts over when the Fed could begin to slow its big bond buys. The report was “soft around the edges,” according to economists from Barclays Capital, adding that the data leading up to the next jobs report will be “decisive for policy outlook.”
Gold futures had edged higher in Asia trade as a privately compiled gauge of the services sector in major gold consumer, China, maintained a steady pace of modest growth in July. The HSBC China Services Business Activity Index was 51.3 for the second month in a row, above the 50 mark signaling growth, though at a level HSBC called “historically weak.”
On Friday, gold prices rose $3.20, or 0.2%, after the Labor Department said 162,000 jobs were created in July. That result fell short of the 180,000 jobs expected by economists MarketWatch polled. The unemployment rate dropped to a more than five-year low of 7.4%, partly because more people left the labor force.
The Fed has said improvement in the labor market is key to its outlook on monetary policy. Analysts have credited stimulus from the Fed and other central banks in recent years in helping push up prices for the precious metal.
But gold futures last week still fell by 0.9% for their first loss in four weeks, and traded below $1,300 an ounce after a batch of upbeat economic data.
“The outlook is bearish for gold, and we expect a test of the major low at $1,180, to target $1,156,” said Scotiabank strategist Russell Browne to clients on Friday. “This is the 61.8% retracement of the 2008-to-2011 uptrend, and should be a major support level for gold.”
The central bank currently buys $85 billion a month in U.S. debt and mortgage-backed securities. Many analysts have said they expect policy makers to reduce the pace of purchases in September.
In other metals action, silver for September delivery SIU3 -1.32% dropped 19 cents, or 1%, to $19.72 an ounce. Last week, futures rose 0.7%.
September copper HGU3 -0.33% was unchanged at $3.17 a pound.
But October platinum PLV3 -0.30% rose $1.50, or 0.1%, to $1,453.00 an ounce and September palladium PAU3 +0.25% gained $4.00, or 0.6%, to trade at $733.70 an ounce.
Saumya Vaishampayan is a MarketWatch reporter based in New York. You can find her on Twitter @saumvaish.
Carla Mozee is a reporter for MarketWatch, based in Los Angeles. Follow her on Twitter @MWMozee.
