December silver futures were last down 3 cents, or 0.1%, at $19.02 a troy ounce. USA interest rate futures indicate that expectations of a rate increase next week remain low, but the dollar could benefit from anything in the Fed’s statement that hints at a hike before the end of the year.
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Spot gold was up 0.1 per cent at $1,319.80 an ounce by 0430 GMT.
Expectations that the US Federal Reserve will raise rates next week have receded, putting pressure on the dollar, which when it falls makes gold cheaper for holders of other currencies.
A chorus of hawkish comments from Fed officials kept hopes alive for a September rate hike despite a recent spate of disappointing economic data, including only a modest rise in U.S. nonfarm payrolls.
“We’re treading water today after the bounce we received from the FOMC comments yesterday, but gathering from the limited impact we’ve seen the market is still probably concerned about the potential for a rate hike later this month”, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, before prices fell to session lows.
“Most expect Fed president Janet Yellen to give some warm-up for December hiking in next week’s meeting”, said Jiang Shu, chief analyst at Shandong Gold Group.
Spot gold may revisit a low of $1,301.91 per ounce, as indicated by its wave pattern, a Fibonacci retracement analysis and a falling channel, according to Reuters technical analyst Wang Tao. “Prices will touch $1,300 or below that shortly”. As interest rates rise, non-interest-bearish assets like gold become less attractive in comparison.
World stock markets and energy prices fell as the United States dollar rose 0.5 per cent. The drop in yields should have supported gold more than it did, as arguably the dip in the dollar should have. Volatility in financial markets increased the past week as the European Central Bank refrained from adding to stimulus and the Bank of Japan continued a review of the costs and benefits of its policies.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.12 per cent to 939.94 tonnes on Friday. Platinum gained 0.1 per cent at $1033.73. The contract settled at $18.975 an ounce on Tuesday-also its lowest settlement since the start of this month. Palladium rose over 1 percent at $659.30.
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