Gold edges lower as focus shifts to United States payrolls data

Andrew Cummings
August 30, 2016

The implied probability that the U.S. Fed will hike interest rates in September had fallen back to 36 percent.

But on Friday, at the Fed's yearly assembly for worldwide central bankers in Jackson Hole, Wyoming, Fed Chair Janet Yellen gave one of the clearest indicators that a rate rise was probably round the corner.

India will not be immune from the impact of the potential September rate hike, but is better placed than most of its rivals at this juncture, a forex dealer said.

In an interview after the speech, Fed vice-chair Stanley Fischer reinforced Yellen's comments by stating that Yellen's speech was "consistent" with a possible two rate hikes this year, while Atlanta Fed president Dennis Lockhart also said two rate hikes this year was possible.

USA stocks rose, halting the longest slide since June, as an increase in consumer spending last month bolstered confidence in the economy and a drop in Treasury yields sparked demand for equities with rates of dividend payouts.

Spot gold touched its lowest since July 26 at $US1,314.70, and was up 0.3 per cent at $US1,324.41 an ounce by 2.49 pm EDT (0449 Tuesday AEST), after falling for the past six sessions straight.

TOKYO -Currencies weakened across Asia on Monday amid growing expectations of a USA interest rate increase, but while Japan stocks got some welcome relief, emerging-market equities fell. "If the payrolls figure is strong, the dollar could move toward a test of the 105 level against the yen", said Mitsuo Imaizumi, chief currency strategist at Daiwa Securities in Tokyo. Investors already expected that the Fed chair will give its assent and hike the interest rates soon and at an appropriate time. Gold edged up $1.20 to $1,327.10 an ounce, silver gained 11 cents to $18.86 an ounce and copper edged down less than a penny to $2.08 a pound. "It's obvious that the dollar will lose momentum if data (due out Friday) disappoints". Fed Chairwoman Janet Yellen in her comments at the Jackson Hole symposium last week appeared to open the door to a rate increase in the coming weeks or months.

September futures on the S&P TSX index were down 0.06 per cent at 7:15 a.m. ET.

Elsewhere, traders seemed less certain with most world stock markets dipping as they tried to second-guess the Fed's timing of its next rate rise.

Brent crude futures were up 6 cents at $49.32 a barrel, while USA crude added 9 cents to $47.0. He believes that economic growth in the second quarter will be stronger than the first quarter while the labor market will continue to tighten. Platinum was 0.2 percent higher at $1,076.20, while palladium was down 0.2 percent at $694.60.

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