Gold futures drop yet forecast to benefit from easing

Anticipations of intervention to spur the U.S. economy tempered losses to gold futures on Monday, according to Reuters.

In the aftermath of a weaker-than-expected jobs report issued late last week by the U.S. Department of Labor, the precious metal hovered about its highest value since this past March. The Federal Open Market Committee, the policy-making arm of the U.S. Federal Reserve, is forecast to indicate later this week that it is geared toward preserving interest rates at a low level.

Gold futures have been on the uptick amid anticipations of monetary easing by the U.S. Federal Reserve, which has signaled its willingness to intervene for the sake of spurring the globe's largest economy.

"We should be in for a correction ahead of Thursday, most probably we will see gold come down to $1,700 or even $1,695, which would be a healthy correction, and once that is done, then those areas will be a very, very good opportunity at which to buy," trading head Afshin Nabavi with MKS Finance told the news source. "Beyond that, I think we could test last year's highs of $1,920 or even higher. The only thing that is putting some doubt in my mind is that we have seen absolutely no physical demand from anywhere … so that is why I think we should maybe have a correction so that we can capture that (consumer) interest."

At 11:19 a.m. on Monday, gold futures fell 0.34 percent, a $5.90 drop to $1,734.60 per troy ounce.

Jobs report's impact

The number of jobs created last month in the U.S. was underwhelming, which prompted the yellowish metal to gain more than 2 percent. That performance was the strongest one-day record thus far this month.

The number of jobs created in August was 96,000, which fell well short of projections.

Consequently, anticipations have been on the rise about the central bank demonstrating this week that it intends to embark on a third round of quantitative easing.

The first two rounds of quantitative easing, which began about four years ago, prompted the precious metal to at least double in value.

Bullion notched its record high price of $1,923.70 per troy ounce slightly more than one year ago.

Emboldened greenback

The value of the U.S. dollar climbed on Monday against rival currencies, according to The Wall Street Journal.

The world's reserve currency and bullion typically perform the inverse of one another.

Despite speculation about U.S. dollars flooding the markets, the monetary unit still gained on Monday.

The Federal Open Market Committee is scheduled to convene for two days beginning Wednesday.

ECB action pushes up futures

Gold futures' climbs last week also are linked with the central bank of Europe indicating it intends to help debt-hobbled countries in the 17-nation euro bloc, according to MarketWatch.

Last week's advance for gold amounted to more than 3 percent and some losses on Monday were attributed to some investors cashing in on those gains.

The "decisions have underlined the ECB's willingness to do everything it can to rescue the euro. Since this will inevitably result in higher inflation, gold should profit," commodity strategists with Commerzbank said, according to MarketWatch.

Allure remains

Despite the losses on Monday, interest in gold is expected to remain.

One analyst told Reuters that the yellowish metal is still likely to push higher.

"The combination of QE and dollar weakness has reignited the interest of the private sector," analyst Michael Lewis with Deutsche Bank told Reuters. "Central banks and the public sector have already been aggressive buyers of gold, so it doesn't change our view. It makes us more relaxed about the view."