The spot gold price stayed supported during Asian trading hours on Friday as the US dollar retreated.
Spot gold was last at $1,339.10-1,339.40 per ounce, up $1.25 from Thursday’s close. Trading ranged at $1,335.95-1,339.40 so far.
The US dollar index has recovered after slipping to a two-week low of 94.46 on Thursday. But it came under pressure again on Friday, falling 0.15 percent to 94.85 so far in the day.
Spot gold had weakened on Thursday following inaction from the European Central Bank (ECB), hawkish rhetoric from Fed speakers and stronger-than-expected unemployment claims data.
On Thursday, the ECB kept interest rates unchanged as expected in the market. President Mario Draghi said he sees rates at present levels or lower for a sustained period but expects real GDP to grow at a moderate but steady pace.
“The message was more one of ‘on hold for now’. Despite downgrading its inflation and growth forecasts modestly, and certainly still maintaining an easing bias, it was the fact that the ECB supposedly didn’t consider an extension of its QE program at this meeting that seems to have been what disappointed the market,” ANZ Research said on Friday morning.
Richmond Fed President Jeffery Lacker said on Wednesday the case for a September hike was going to be “strong” and echoed his colleague Esther George who said that she too saw the US labour market approaching full employment.
The hawkish rhetoric – along with employment claims coming in better-than-expected at 259,000 – led to a minor dollar revival earlier during US trading hours.
Market participants currently see a 21 percent change of a US rate hike in September, with majority expecting it to happen in December, according to the CME FedWatch Tool.
“We continue to think that gold prices will trend higher still in near term, largely driven by lower Fed tightening expectations,” Boris Mikanikrezai , a metals analyst at FastMarkets, said.
“Given our view that the Fed is unlikely to move in September, the current probability of a September move is likely to ease further. This should boost gold prices.”
In data, China’s August CPI came in at 1.3 percent, below July’s reading of 1.8 percent and market forecast of 1.7 percent.
C
hinese August PPI fell 0.8 percent, improving from a drop of 1.7 percent in July and better than consensus of a 1-percent drop. August, however, marked the 54th straight month of decline for Chinese PPI.
More Chinese data are due for release next week, this including foreign direct investment, industrial production, fixed asset investment, retail sales, new loans and M2 money supply.
It is a quiet day for US data, with mainly wholesale inventories due later today.
In equities, the Shanghai Composite fell 0.02 percent to 3,095.22 recently on Friday.
In commodities, the Brent crude oil spot price slipped 0.3 percent to $49.53 per barrel, and the Texas light sweet crude spot price decreased 0.15 percent to $47.21 so far on Friday.
In other precious metals, silver was last at $19.605/19.625, up $0.005. Platinum was recently at $1,083/1,093, up $5, and palladium gained $7 to $686/694 recently on Friday.
On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 289.05 yuan per gram, and the December silver was flat at 4,367 yuan per kilogram.
(Additional reporting by Dalton Barker)
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