New York 04/04/2012 - Gold selling intensified on Wednesday after strong US jobs numbers further tempered expectations that the Federal Reserve will roll out a third round of quantitative easing (QE3) in the near term.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange were last down $49.60 - nearly three percent - at $1,622.40 per ounce. Trade has ranged from $1,618.80 to $1,649.50.

The precious metals complex received a surpriser yesterday afternoon when the minutes from the March 12 meeting of the Federal Open Market Committee (FOMC) disclosed that another boost of liquidity from the US central bank would only happen if the economy “lost momentum” or if inflation seemed likely to remain below its mandate consistent rate of two percent.

Over the past couple weeks, speculative money flowed into gold based on the assumption that QE3 would be announced within the next couple months. Monetary accommodation is seen as unequivocally bullish for gold as cheap money tends to debase the dollar and create future inflationary risks.

“With the FOMC minutes revealing that only two of the 10 voting member supported further easing, the market has again showed itself to be rather sensitive to headlines on Fed policy. It also looks increasingly like the market will have to be slowly weaned off the injections of liquidity, if it is to avoid a sharp correction,” Standard Bank said in a note.

In news, payroll processor Automatic Data Processing (ADP) reported that the US private sector added 209,000 jobs last month, beating expectations of a 206,000 reading. Additionally, the February data was revised upwards to 230,000 from 216,000 previously.

Normally, commodities and equities would react positively to robust employment figures but that was not the case this morning - this report makes QE3 even less likely.

In wider markets, the dollar was last about a cent higher at 1.3120 against the euro, while the Dow Jones industrial average and S&5 500 opened down 0.86 percent and 0.85 percent respectively.

Other precious metals followed gold lower, with Comex silver futures for May delivery down $1.75 at $31.520 per ounce. Platinum for July delivery on Nymex was $46.40 lower at $1,614.40 and the June palladium contact was at $645.45, down $14.15.

Meanwhile, US car and light truck vehicle sales were at a seasonally adjusted annualized rate (SAAR) of 14.37 million in March, down 4.4 percent from the 15.03 rate last month and missing the forecast of a 14.7 million SAAR.

Even though sales came in below expectations, the automotive sectors still managed to post its best quarter since the start of 2008.


(Editing by Mark Shaw)

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