Gold edged lower on Friday morning in London – investors remain cautious ahead of the blockbuster US jobs report due later today. The market expects August’s non-farm employment change at 186,000.
– The spot gold price was last at $1,311.65/1,311.95 per ounce, down $2.35 on Thursday’s close and confined to a narrow range of $1,309.80-1,316.12 so far.
– “Precious metals could surprise to the upside today. Investors seem to have built some short positions across precious metals since the start of the week on expectations of a stronger US jobs report, reflected in the stronger expectation of a Fed move in September,” FastMarkets analyst Boris Mikanikrezai said.
– “But given our view that the Fed is unlikely to raise rates in September even if US jobs numbers are robust because of rising downward risks to the inflation outlook, a short-covering rally may develop once the market starts to revise lower the probability of a Fed rate rise in September,” he added.
– The likelihood of the Fed raising rates in September has risen to at 27 percent from 20 percent at the start of the week, according to the CME FedWatch tool.
– “A stronger US labour market isn’t necessarily new ‘news’ for the Fed or its watchers, as it has been pretty solid for some years now,” ANZ noted. “The worry for some Fed officials remains an absence of a generalised pickup in inflation. Thus a relatively large outturn relative to expectations, along with more evidence of a pickup in wages, is probably needed to get the market thinking of a near-term hike from the Fed.”
– A three-day holiday weekend from tomorrow may prompt further book-squaring for gold, James Steel at HSBC noted.
– In the other precious metals, silver was little changed at $18.865/18.885 per ounce, platinum at $1,044/1,051 was up $2.50 and palladium gained $4 to at $664/672.
(Editing by Mark Shaw)
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Source: Bullion Desk News
