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Permits for future US home construction marked a near 5-1/2-year high in October and prices for single-family homes notched big gains in September, the latest signs of strength in the economy, which could prompt the Fed to reduce its monthly bond purchases of $85 billion soon. Economists polled by Reuters expect the US central bank to begin tapering only in March, but gold prices are subdued as some traders see a risk that the Fed could begin tapering in December.
Gold steadied on Thursday after a two-day decline but it was not too far from a four-and-a-half-month low as strong weekly jobs data in the US stirred fear of an early winding-down of the Federal Reserve’s economic stimulus. Speculators fear strong economic data could prompt the Fed to cut back on its $85bn in monthly bond purchases, which have added to gold’s appeal as a hedge against inflation. The number of Americans filing new claims for unemployment aid unexpectedly fell last week, data from the Labor Department showed on Wednesday.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), fell 5.70 tonnes to 843.21 tonnes on Wednesday to their lowest since early 2009. The fund has seen outflows of more than 450 tonnes this year as investors put more money into equities as stock markets rallied. The outflows from ETFs have been a big factor in gold prices dropping more than 25% in 2013.
China gold imports from Hong Kong picked up last month as peak-demand season approaches, South China Morning Post reported. "There's preparation for demand that always ramps up in the fourth quarter," said Wang Xinyou, the head of the precious metals division at Agricultural Bank of China in Beijing. Net imports, after deducting flows from the mainland into Hong Kong, were 129.9 tons, compared with 109.4 tons in September, according to data from the Hong Kong Census and Statistics Department. The amount in the first 10 months more than doubled to 955.9 tons from a year earlier, the data also showed.
Silver tumbled by 181 points today to trade at 19.712 following cues from gold and worries about the Federal Reserve tapering. While copper added 9 pips to trade at 3.205. Copper eased on Wednesday but is expected to remain flat today with little data and US markets closed. Traders will wait for numbers out of China over the next few days. The US dollar will most likely remain flat until the new month with US traders on holiday.