Gold rebounds moderately after a sharp drop

Gold price rose, rebounding from a 3.5 month low after ADP reported that the level of employment in the US private sector grew in September, less than expected, impacting the optimism about the US labor market.

On Tuesday, gold collapsed down to $ 43.00, or 3.28%, registering the biggest day drop since September 2013, as the US dollar jumped to a two-month high, while stocks increased significantly.

ADP reported that the level of employment in the private sector rose by a seasonally adjusted 154,000 last month, below forecasts of +169.000. Previos 175,000 jobs figure was revised downward from +177,000.

In the last hours the price of gold retreated from session highs as the dollar strengthened after the release of strong data on business activity in the US service sector.

Final data presented by Markit Economics, showed that the seasonally adjusted index of business activity in the US service sector grew in September to 52.3 points compared to 51.0 points in August. This value is the highest since April. Previously it was reported an increase to 51.9 index points. Economists had expected the index to reach 51.9 points. It is worth emphasizing, the index remains in the territory of expansion, ie, above 50 points for the seventh consecutive month. The average value of the index for the third quarter amounted to 51.5 points, which was slightly lower than in the 2nd quarter (51.8 points).

Currently the chances of a FED hike in November, up about 15%, and the probability of a rate hike at the meeting in December - almost 64%.

The cost of December futures for gold on COMEX rose to $ 1279.4 per ounce.