The spot gold price stayed supported during Asian trading hours on Wednesday after weak US data sank the US dollar alongside expectations of a September Fed rate hike.
Spot gold was last at $1,349.20-1,349.50 per ounce, up $1.45 from Tuesday’s close. Trading ranged at $1,347.55-1,351.15 so far.
The yellow metal had hit $1,352.50 on Tuesday, the highest since 19 August.
The US dollar weakness was a major contributor to the move higher, while the return of US participants following their Monday holiday also added to interest in the metal, MKS Group said on Wednesday morning.
“Gold looks to be moving into the next rally-stage should it trade materially above $1,350,” the broker added.
The US dollar index came under pressure from the weak US data, falling to as low as 94.76 on Wednesday – the lowest since August 26. . It was last at 94.83 on Wednesday, down 0.09 percent from the previous day’s close.
On Tuesday, the US ISM non-manufacturing PMI undershot at 51.4 against a forecast 55.4, as did the IBD/TIPP economic optimism index at 46.7 – a reading of 48.6 had been anticipated.
This came on the heels of weaker than expected August non-farm employment change last Friday which showed 151,000 Americans joining the labour market, missing expectations of a 186,000 increase.
“The recent ramp up in Fed rhetoric aimed at putting the market on the scent of an imminent Fed funds rate hike took another blow last night following a sharp drop in the August ISM non-manufacturing index,” National Australia Bank said on Wednesday morning.
“Recent data releases reinforce our view that the Fed will stand pat in September and hike December assuming data and financial condition remain supportive.”
Market participants lowered their expectations of a September rate hike to 18 percent on Tuesday from 21 percent a day ago, with majority expecting an increase only in December, according to the CME FedWatch Tool.
In data, the US JOLTS job openings will be due later today.
In equities, the Shanghai Composite rose 0.37 percent to 3,102 so far on Wednesday.
In other commodities, the Brent crude oil spot price rose 0.15 percent to $47.40 per barrel, and the Texas light sweet crude spot price gained 0.54 percent to $44.94 recently on Wednesday.
In other precious metals, silver was last at $19.98/20.02, up $0.04. Platinum was recently at $1,098/1,105, up $5.50, and palladium gained $5 to $695/703 recently on Wednesday.
On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 290.75 yuan per gram, and the December silver was flat at 4,429 yuan per kilogram.
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Source: Bullion Desk News
