Gold futures steadied Wednesday morning in the US, although investors have returned in droves following a string of poor data releases.
Gold for December settlement on the Comex division of the New York Mercantile Exchange slipped $2.0 or 0.2 percent to $1,352.0 per ounce. Trade has ranged from $1,350.30 to $1,357.60.
On Tuesday, US service sector data came in at the weakest levels in over six years and combined with Friday’s disappointing labour report to cast a negative backdrop heading into the new month.
In response, dollar index fell as low as 94.76 on Wednesday – its softest since August 26 – and was last at 94.84.
Prediction markets reacted by discounting the odds of a September rate hike to only 15 percent and a majority of investors don’t see the Federal Reserve lifting rates until spring 2017.
“Pundits were quick to jump on the bandwagon in dismissing a September rate hike but that will turn on a dime if the next economic news bite is more encouraging,” Peter Hug, Kitco Metals Global Trading Director, said. “The overall market has a constructive support edge to it but a break-out to higher levels will require something more than the Fed remaining on hold.”
Until the Fed meeting concludes on September 21, investors will be focused on any potential hints from various officials. Today, Esther George, Kansas City Fed president, is scheduled to speak and has been one of the most outspoken supporters of a near-term rate hike.
Looking ahead, the European Central Bank is scheduled to meet on September 8. Policy officials are expected to address the limited number of assets and persistently low inflation despite unprecedented stimulus measures.
Investors returned in droves overnight with exchange-traded-funds tracked by FastMarkets surging 13.78 tonnes to a total of 2,115 tonnes – near a three-year high.
“The profit-taking seems to have run its course and the lower prices have attracted follow-through buying,” William Adams, Head of Research at FastMarkets, said.
“We feel prices will now have to push up into new high ground to avoid further stale long liquidation and possibly short-selling. Our big-picture outlook remains bullish but more profit-taking could easily be triggered if the price action disappoints,” Adams continued.
In data, US PMI, JOLTS job openings and Beige book are scheduled for release later today.
Turning to European markets, Germany’s DAX and France’s CAC-40 were up 0.3 percent and 0.2 percent respectively, while the dollar strengthened 0.1 percent to $1.1240 against the euro.
As for other precious metals, Comex silver for December settlement fell 12.3 cents or 0.6 percent to $20.010 per ounce. Trade has ranged from $19.945 to $20.235.
Platinum for October delivery fell $3.50 or 0.3 percent to $1,099.20 per ounce, while the most active palladium contract stood at $699.30 per ounce, down $1.35.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
