Gold prices broke above the $1,300 per troy ounce level in Jun 2016 after Britain voted to leave the European Union (EU).
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Gold held steady on Thursday above two-month lows hit in the previous session after the dollar gave up gains as investors wait for clues to the next USA interest rate hike from the nonfarm payrolls report on Friday.
The case for a rate hike has strengthened in recent months, with a lot of new jobs being created, and economic growth is looking likely to continue at a moderate pace, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming, on Friday.
Cleveland Fed President Loretta Mester, a voting member on the Fed’s policy-setting committee this year, was the latest to join the chorus on Thursday, saying the USA labor market is at full strength and the Fed needs to be on a path of gradual interest rate increases. USA gold futures were down 0.1 percent at $1,310.10. An upbeat payrolls report would reinforce the view that a USA rate increase is likely before the end of the year after Fed Chair Janet Yellen said last week that the case for higher rates had strengthened. “Technicals show that gold and silver prices need some correction and will see some mild rebound”.
The dollar rose after a report by a payrolls processor showed United States private employers added 177,000 jobs in August, above economists’ forecasts.
Fischer has said that jobs data for August due on Friday will be a consideration for when the Fed raises rates. An upbeat payrolls report would reinforce the view that a USA rate hike may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend. “Historical analyses of Indian market returns in the period post US Fed’s rate hikes show that equities have tended to do well – market returns were positive in most cases when the US hiking cycle began”, it said in a report. The metal touched a low of $1,304.91 on Wednesday, its lowest since June 24.
The greenback declined against the Australian dollar after data released Thursday signaled a recovery in non-mining capital spending in the South Pacific nation and China’s official factory gauge unexpectedly rose last month to the highest level in nearly two years. “We have seen no panic from either exchange-traded product investors, where holdings are up on the month, while hedge funds have only reduced net longs by 8% from the July peak”. Core PCE has been stuck at 1.6 percent for a few months now, with inflation expectations among the general public as well as in markets going nowhere. Silver was up 0.5% at $18.66 an ounce. Platinum rose slightly to $1,051. The market was respecting technical support around the 38.2 percent Fibonacci retracement level at $1,316, from the July high to May low, basis December, Tesfaye said.
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Palladium was up 0.5 per cent at $672.72, after falling to a near six-week low of $665.97.
