Gold futures drifted around their previous closing level on Wednesday morning in the US, lacking fresh impetus, although US data later today could spark the precious metals to life.
Gold for August settlement on the Comex division of the New York Mercantile Exchange edged $3.30 higher to $1,220.80 per ounce. Trade has ranged narrowly from $1,215.20 to $1,222.90 so far.
“We have seen the highs for a while and will range for the next few months within $100 of here,” David Govett of Marex Spectron said. “The market direction will be dictated by economic figures and as such will be jumpy with little momentum unless these are markedly out of line.”
The surge in the dollar has put gold and the rest of the commodities sector under pressure but, with the dollar index consolidating around last week’s nine-week-high over the past couple of sessions – it was recently at 95.39 – gold trading has been lacklustre.
Geopolitical concerns are also contributing to the current impasse, with US and UK monetary policy decisions expected to keep the metal in a tight range until the end of the month.
“With the FOMC meeting two weeks away and with the market more bullish about an interest-rate rise, gold may struggle on the upside for a while and spend more time consolidating,” FastMarkets’ William Adams said. “After the FOMC decision, the focus is likely to turn to the Brexit vote, which is likely to heat up in the final run-up to the vote.”
“We still like gold’s price outlook and think this price dip will attract and unleash pent-up demand but the market is likely to remain nervous and choppy until after the Brexit vote,” he added.
Data today could also result in some choppy price moves. Already released, the EU final manufacturing PMI was on target at 51.5 despite Italian and German data missing forecasts.
From the US, the final manufacturing PMI, the ISM manufacturing PMI, construction spending, ISM manufacturing prices, total vehicle sales and the Fed’s beige book are all due later before Friday’s blockbuster payrolls report, which is expected to show 160,000 jobs were added in May.
This has grown in importance since the FOMC was hawkish in its April meeting minutes, saying it is prepared to raise rates as soon this month. If the labour market continues to show improvement while inflation and wages tick higher, the likelihood of an increase at its June meeting grows.
“We still think it’s too early to ‘buy the dip’ outright, particularly ahead of Friday’s deluge of US data,” ICBC Standard Bank analyst Tom Kendall noted.
Turning to international markets, Germany’s DAX and France’s CAC-40 were down 0.7 percent and 0.8 percent respectively.
As for other precious metals, Comex silver for July delivery gained 6.6 cents or 0.4 percent to $16.060 per ounce. Trade has ranged from $15.970 to $16.105. Platinum ticked up $2.60 or 0.3 percent to $983 while palladium at $548.90 was up $1.55 or 0.3 percent.
(Editing by Mark Shaw)
The post Gold drifts, investors cautious ahead of major data releases appeared first on The Bullion Desk.
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Source: Bullion Desk News
