– Hawkish comments from Fed chair Janet Yellen and other central bank speakers last Friday have lifted expectations that it will raise rates this year. Interest rates have been cut below zero and free loans offered to banks. Federal Reserve would not hike interest rates anytime soon. “With Friday’s USA payrolls data looming large, we are seeing ranges tighten (for gold) and skew to the downside as anticipation builds for a potential September interest rate hike”, said Sam Laughlin, precious metals trader with MKS PAMP Group.
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The greenback had briefly advanced to a one-month high of 103.540 yen overnight on a slightly stronger-than-expected US ADP National Employment Report for August, but its rise was tempered after the August Chicago purchasing managers’ index (PMI) fell short of expectations. The euro declined against dollar on Wednesday, as the dollar strengthened across the board after data showed US private employers maintained a steady pace of hiring in August and pending homes sales surged in July, suggesting the economy was regaining momentum for the Federal Reserve to raise interest rates this year.
The dollar index .dxy was little changed at 96.028 after rising to 96.143 overnight, its highest since August 10. Sterling hit low at $1.3070 after the United States economic data, but recovering most of the ground to trade at 1.3137 in the late U.S. session. Earlier in the week, the US currency had carved out significant gains against its peers following comments from Federal Reserve Chair Janet Yellen last Friday at a central bankers’ gathering in Jackson Hole, Wyoming that revived near-term rate hike prospects.
Oil prices fell for a second straight day in response to the dollar’s strength, but the downside was limited by production suspensions in the U.S. Gulf, due to an expected tropical storm.
The dollar slid 0.2% to 3.22 real. Some doubts as to whether the USA central bank will be able to move next month helped European shares gain.
UK’s benchmark FTSE 100 closed down 0.52 percent, the pan-European FTSEurofirst 300 ended the day down by 0.28 percent, Germany’s Dax ended down 0.45 percent, France’s CAC finished the day down by 0.17 percent. United States gold futures for December delivery settled down 0.8 percent at $US1,316.5 per ounce. Stocks in South Korea .KS11 added 0.7 percent and Australia .AXJO 0.4 percent.
Brent crude futures settled down $1.33, or 2.8 percent, at $47.04 per barrel.
Yields on benchmark USA 10-year Treasury notes were little moved on Wednesday but notched their largest monthly gain in more than a year as strong US data and limited volatility reduced the appetite for safe-haven US government debt. USA crude settled down 63 U.S. cents, or 1.34 per cent, at $US46.35 per barrel.
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Spot gold was $1,314.16 an ounce at 0932 GMT, up 0.3 percent, having slipped 1 percent in the previous session to touch a two-month low of $1,308.65.
