Gold prices dropped in Asia on Monday with growth factors observed from the main buyers in India and China and as the enterprise equity markets battered the precious metal’s safe-haven appeal, while speculating on a hike earlier than expected interest rates in the United States following strong jobs data also pulled on gold prices.
Gold has come under pressure since the data on Thursday showed U.S. employment growth rose in June and the unemployment rate closed at least six years, conclusive evidence of accelerated economic growth.
Asian shares stayed close to three-year highs on Monday by the optimism about the U.S. economy, while global equities hit record levels on Friday.
“The U.S. economy is in good form and is sending funds to equities,” said 100MCXTips traders.
Spot gold fell 0.3 percent to $ 1,316.50 an ounce by 0339 GMT, after five straight weekly gains.
On the other hand, U.S. gold for delivery in August quoted at $ 1,319.10 a troy ounce, down 0.17%, after ending last week at $ 1321.30 a troy ounce.
At MCX Gold August futurtes contract was trading at Rs 27426 down Rs 131, or 0.48 percent. Gold price touched an intraday high of Rs 27511 and an intraday low of Rs 27416.
An optimistic U.S. jobs report pushed several economists to playing with the idea of advancing their forecasts of a rise in interest rates by the Federal Reserve, but most firm endured, preferring to wait for further data. A rise in interest rates could dent the appeal of gold as a hedge against inflation.
The U.S. jobless rate scored to a minimum of five and a half year of 6.1% from 6.3% in May. Analysts were expecting the jobless rate to remain stable at 6.3% last month.
Prices are expected to retry stand on $ 1,311, with a good opportunity to break out below this and dropping to $ 1.297 analyst Wang Tao said from Reuters.
But geopolitical tensions in Iraq and Ukraine should continue to support bullion and reverse losses.
Profiteers raised their net long positions respectively in gold by 22,573 contracts to 136,929 in the week ending July 1, data from the Commodity Futures Trading Commission showed on Friday.
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