Gold futures were on pace to end the week on the downbeat note amid a broad-based selloff partially fueled by the European Central Bank (ECB) decision to not expand its balance sheet.
Gold for December settlement on the Comex division of the New York Mercantile Exchange declined $7.0 or 0.5 percent to $1,334.60 per ounce. Trade has ranged from $1,334.10 to $1,343.60.
The ECB’s unexpected stance led to a broad-based selloff in the commodities sector, while also fueling a dollar rally – last trading at 95.45 on the dollar index, the highest point in a week.
It also raised the prospects that the ECB’s US counterpart will make a similar hawkish decision when the Federal Reserve meets on September 20-21.
Still, given the looming presidential election and the forecast-missing jobs report for August, the central bank is widely expected to hold off on raising rates until next year at the earliest despite increasing optimistic rhetoric from FOMC members.
The policy board is contending with sub-par inflation and uneven GDP growth while consumer sentiment is still downbeat despite unemployment holding below five percent.
“Our big-picture outlook remains bullish but more profit-taking could easily be triggered if the price action disappoints, as it may be starting to do,” William Adams, head of research at FastMarkets, said. “On balance, we expect prices to break higher before too long, so would look for buying opportunities either into strength or into a rebound if prices dip further.”
Meanwhile in a slow data day, US wholesale inventories for July were unchanged, missing expectations of a 0.1 percent rise.
Overnight, 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.
The Chinese August PPI fell 0.8 percent, improving from a drop of 1.7 percent in July and better than consensus of a one-percent drop. August, however, marked the 54th straight month of decline.
Turning to US markets, the Dow Jones industrial average and S&P fell 1.4 percent and 1.6 percent respectively, while the dollar strengthened 0.5 percent to $1.1217 against the euro.
As for other precious metals, Comex silver for December settlement fell 31.1 cents or 1.6 percent to $19.365 per ounce. Trade has ranged from $19.345 to $19.725.
Platinum for October delivery tumbled $17.50 or 1.6 percent to $1,067.20 per ounce, while the most active palladium contract stood at $678.90 per ounce, down $8.95.
(Editing by Tom Jennemann)
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Source: Bullion Desk News
