Gold price under strong pressure

In dollar term, the gold price fell to a three-month low of $1,086 per troy ounce on Friday and is thus nearing its end of July multi-year low.  

A marginally recovery is seen in this morning and still trading below the $1,100 mark , notes Commerzbank. The price slide was due to the firm US dollar following surprisingly robust US labour market data. 

In the U.S., unemployment rate has been declined to 5.0% in October as 271,000 new jobs were created in the same month. Similarly, a sharp rise in average hourly earnings also noticed.

The US economy appears to be coping well with the global headwind. The domestic economy is able to balance the problems encountered by the manufacturing sector.

According to the Fed Fund Futures, the market assumes that there is a 70% chance that Fed may increase interest rates in December. This outlook is also prompting ETF investors to withdraw further from gold. 

Gold ETFs saw their sixth daily outflow in a row on Friday, their holdings having been reduced by nearly 27 tons last week alone. Speculative financial investors also played their part in the latest price slide, having slashed their net long positions by over 41% to 67,200 contracts in the week to 3 November, adds Commerzbank. Net longs are likely to have been reduced even further in the following days.