The rally started early last week with Federal Reserve officials universally optimistic on how the USA economy is progressing moving into the second half of the year.
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Spot gold fell to $US1,304.91 an ounce, its lowest since June 24, the day after Britain voted to leave the European Union.
“Small, continued pressure on longs in gold as ADP figures were close to expected and traders are unwilling to commit prior to Friday’s big jobs number, which could bolster Fed speakers making a case for raising rates”, George Gero of RBC Wealth Management said.
The data overturned earlier dollar strength as investors wait on highly anticipated jobs data due on Friday for new clues on when the Federal Reserve will next raise interest rates.
Financials .SPSY were the best performer on the S&P 500, with Wells Fargo WFC.N up 2.2 percent.
On Wednesday, Boston Fed President Eric Rosengren said the Fed should consider that quicker interest rate rises over time could stave off risks to the economy, while Chicago Fed President Charles Evans said he is increasingly convinced that U.S. economic growth has slowed permanently.
In this context, gold prices gradually edged higher to the $1,325 area in late USA trading as narrow ranges dominated during the session.
“Nerves have become a bit fraught ahead of the September FOMC meeting, given the latest comments from Janet Yellen”, Saxo Bank’s head of commodities research Ole Hansen said. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, posted the first monthly dip in four months in August.
The market awaited Friday’s jobs report to see if US labour conditions are strong enough to justify the Fed’s monetary policy stance. Overall trends in gold prices are likely to be dominated by trends in the dollar and U.S. interest rate expectations.
In other action, the pound pushed higher after the Nationwide Building Society said United Kingdom house-price growth picked up slightly in August (http://www.marketwatch.com/story/uk-home-prices-pick-up-despite-brexit-2016-08-31), in contrast with earlier signs that the housing market may be cooling following the country’s Brexit vote in June.
Sam Laughlin, precious metals trader with MKS PAMP Group, said, “With Friday’s U.S. 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”. “Gold could fall below $1,300, even if the market is pricing in good jobs data tomorrow”.
Platinum was 0.7 percent lower at $1,062.99, while palladium was down 1.4 percent at $686.
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As for other precious metals, Comex silver for September delivery rose 3.8 cents or 0.2 percent to $18.615 per ounce. Pending home sales month-over-month in July grew 1.3 percent, toppling economic consensus of 0.7 percent growth.
