The gold price was flat and range-bound during Asian trading hours on Thursday as investors stayed cautious after Wednesday’s price fall and ahead of the US Federal Open Market Committee meeting next week.
Spot gold was last at $1,107/1,107.4 per ounce on Thursday, up just $0.2 on Wednesday’s close. Trading ranged from $1,104-1,108.5 so far.
Gold had slumped to $1,101.5 on Wednesday, the lowest level in a month, with stops triggered below important support levels between $1,115-1,116, said Commerzbank on Thursday morning. Market participants had continued to reduce their net longs in gold ahead of the next week’s critical US FOMC meeting, it said.
The FOMC meeting on September 17 is expected to spur a more definitive price movement, especially if the FOMC decides to raise the Federal Funds rate for the first time since 2006.
“We expect investors to further reduce net long positions in the wake of Fed rate hikes this year and next year…[along with] a higher US dollar,” ABN AMRO had said on Wednesday. “Gold weakness is not over yet and further price falls are likely.”
Gold would be capped at $1,115-1,120 with further downwards pressure in London and New York trading sessions once Chinese demand is removed, said MKS Group on Thursday morning.
In data, August CPI announced by China on Thursday was at two percent – up from 1.6 percent in July and slightly higher than expectations of 1.9 percent – on rising food costs in the country.
Chinese PPI in August fell for the 42nd straight month to 5.9 percent – compared with a drop of 5.4 percent in July and market forecasts of a 5.6 percent fall – amid low commodity prices, and overcapacity in many of its industries.
In US data announced on Wednesday, JOLTS job openings in July were 5.75 million, above the forecast of 5.3 million. Additionally, the previous month was revised up to 5.32 million from 5.25 million.
The market will look to other Chinese data set to be announced over the next few days, this including M2 money supply, new loans, industrial production, fixed asset investment and retail sales.
In equities, major US stock market indexes were down 1.2-1.4 percent at Wednesday’s close after early gains were reversed during afternoon trading.
The Chinese stock market took direction from US bourses on Thursday morning, with the Shanghai composite index falling 1.04 percent to 3,209.507 so far. This contrasted with its strong 2.29 percent rise to 3,243.089 at its Wednesday’s close.
In other precious metals, silver was up just $0.02 to $14.59/14.64 per ounce recently. Platinum was last at $979/984, up $3.5, while palladium rose $5 to $577/583 so far on Thursday morning.
“Silver will need to hold $14.50 and more importantly $14.40 if it is to once again make an attempt at $15.00. The grey metal may however catch a cold from gold’s weakness should the yellow metal be sent through $1,100,” said MKS.
On the Shanghai Futures Exchange, gold for December delivery was unmoved at 229.85 yuan per gram, while December silver was flat at 3,318 yuan per kilogram recently on Thursday morning.
(Additional reporting by Dalton Barker)
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