LONDON — Gold hit a five-month low on Wednesday as investors awaited US economic data later in the week that could increase speculation the Federal Reserve will soon exit its asset purchase scheme. The metal has been under pressure as markets believe a recovering economy could prompt the Fed to slow the pace of its $85bn in monthly bond purchases as soon as December. Investors realise the central bank will start reducing stimulus at some point, but the timing remains open to question. Data on US gross domestic product on Thursday and the nonfarm payrolls report on Friday will be closely monitored, ahead of the central bank’s next policy meeting on December 17-18. Spot gold fell 1% to its lowest since July 5 at $1,211.44 an ounce earlier in the session and was down 0.9% to $1,217.06 by 10.52am GMT. The metal has hit a fresh five-month low in every session this week. Technically, having broken resistance at $1,220, the metal is now vulnerable to touch long-term support of $1,200, which could bring losses to a three-and-a-half-year low of $1,180 hit in June. US gold futures fell 0.7% to $1,212.50 an ounce, while gold in euros dropped to its lowest since July 2010 at €892.75 an ounce in earlier trade. Gold continued to lose ground despite a retreat in the dollar, which fell 0.3% against a basket of currencies. "There is definitely an attitude of wait and see in other assets and more selling pressure in gold and the next leg down is being awaited and the stimulus for that could be the numbers on Friday," Mitsubishi analyst Jonathan Butler said. The Fed’s money-printing for bond purchases has played a key role in bolstering gold prices over the past few years, as a low interest rate environment and increased liquidity encouraged investors to put money into noninterest-bearing assets such as bullion. However, a recovering US economy has prompted talks of an end to the stimulus measures and a shifting of investor money to equities from gold, usually considered a safe haven in times of financial or geopolitical troubles and an hedge against inflation. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 1.80 tonnes on Tuesday to their lowest since early 2009 at 841.41 tonnes. A record outflow of 460 tonnes from the fund this year has helped fuel a 27% decline in gold prices so far. Physical buying, which tends to provide a floor to prices, has failed to pick up in a big way in recent weeks as most consumers had bought a lot more than necessary during earlier price drops this year. They were now waiting on the sidelines expecting further declines in prices, said dealers. "Some opportunistic physical buying could emerge near early July lows ($1,207.50), but the overall sentiment will still be driven by US economic expectations," VTB Capital said. Silver fell 0.6% to $19.01 an ounce earlier. Spot platinum was down 0.6% to $1,346.75 an ounce, and spot palladium lost 0.3% to $711.75 an ounce.

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