Wednesday, 02 September 2015 19:49
LONDON: Gold eased on Wednesday as a rebound in stocks and the dollar arrested a four-day rally, with uncertainty over the timing of a looming US rate hike limiting price moves ahead key US non-farm payrolls data on Friday.
The metal retreated from early highs as European shares rose and US stocks opened up almost 1 percent, rebounding from the previous day’s steep losses after fresh intervention from China helped calm jittery investors.
It also came under pressure from strength in the dollar, which rose 0.4 percent against a basket of currencies.
Spot gold was down 0.4 percent at $ 1,135.51 an ounce at 1437 GMT, while US gold futures for December delivery were down $ 4.80 an ounce at $ 1,135.00. “We have to wait until we actually see the payrolls numbers this Friday,” Capital Economics analyst Simona Gambarini said. “We don’t really expect much movement in the gold price (ahead of that).
Investors are just waiting on the sidelines to see what the Fed will decide.” Gold has risen 2 percent since a sharp slide last week bottomed out at $ 1,117.35, but traders remain wary of taking up fresh positions until they receive more clarity on when the Fed will press ahead with its first rate hike in nearly a decade.
Low interest rates cut the opportunity cost of holding non-yielding bullion while pressuring the dollar. Gold’s near 4 percent drop this year is largely due to expectations that rates will rise.
The Fed has pegged the likelihood of a rate rise to the strength of US data.
The August US non-farm payrolls report on Friday is being closely watched, Mitsubishi analyst Jonathan Butler said.
“Attention will inevitably turn to the fact that December is now looking the most likely for lift-off on rates, and maybe the market will start to price that in,” he said.
The ADP employment report on Wednesday showed US private employers maintained a solid pace of hiring in August despite recent global financial market turmoil, suggesting that labour market momentum likely remains strong enough for the Fed to consider an interest rate hike this year.
From a technical perspective, gold is well placed to test the 2015 downtrend at $ 1,163 an ounce as long as it holds above last week’s low, Commerzbank’s technical team said in a note.
Among other precious metals, silver was down 0.1 percent at $ 14.55 an ounce, palladium was up 1.1 percent at $ 573.47 and platinum was up 0.8 percent at $ 1,007.24.
