The dollar edged lower against the other major currencies in subdued trade on Friday, as no major USA economic data was to be released throughout the day and as lower expectations for a 2016 US rate hike continued to dampen demand for the greenback.
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United States services sector activity slowed to a six-and-a-half-year low in August amid sharp drops in production and orders, pointing to slower economic growth that further diminished prospects for a near-term interest rate increase. Then again, if we can break beyond the top, that would be an extremely bullish indication as the market would then touch towards the 0.80 level above.
Spot gold was slightly down 0.2 per cent at $1,335.90 per ounce by 0724 GMT.
Gold strength seen persisting on uncertainty * Silver hits more than three-week high * Platinum, palladium touch two-week highs * SPDR gold holdings rise 1.5 percent on Tuesday (Updates throughout, adds LONDON dateline, byline) By Zandi Shabalala LONDON, Sept 7 (Reuters) – Gold steadied near two-and-a-half-week highs on Wednesday, losing momentum due to profit taking following a rally in the previous session on USA data that weakened the case for a US rate rise soon. A rebound in the dollar after Boston Fed President Eric Rosengren said the USA central bank increasingly faces risks if it waits much longer to hike rates added to pressure on gold on Friday.
The market sentiment has certainly changed since Tuesday’s poor economic data, MKS PAMP Group trader Alex Thorndike said.
“Eyes would also be on tonight’s initial jobless claims, where any disappointment above the 265 000 mark should further fuel calls for the Fed to keep its rates on hold in its upcoming September meeting”, Barnabas Gan, an economist at Oversea-Chinese Banking Corporation, said by e-mail. The metal touched US$1,352.74 on Wednesday, its highest intraday level since Aug 19.
Spot gold may extend its gains to $1,358 per ounce, as it has cleared a resistance at $1,347, according to Reuters technical analyst Wang Tao. Platinum rose 0.5% to $1,087.50/oz.
The European Central Bank (ECB) held interest rates at record lows and kept the door open to more stimulus on Thursday but gave few hints about its next move, disappointing markets that had priced in a decisively dovish tone.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.13 per cent to 950.62 tonnes on Thursday. “Conversely there has been regular dip buying”, analysts at ScotiaMocatta said in a note.
Spot silver added 0.4 per cent, platinum rose 0.1 per cent and palladium climbed 0.7 per cent.
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A carry-trade strategy buying four highest-yielding currencies, including the real and rand, against four lowest-yielding ones, such as the euro and yen, lost about 0.6 percent Friday, cutting its gain this year to 6.2 percent, according to data compiled by Bloomberg.
