Gold prices reversed after lingering in negative territory as disappointing US wage data weighed on the dollar and in turn boosted the precious metals complex.
Gold for December delivery on the Comex division of the New York Mercantile Exchange rose 20 cents to $1,088.60 per ounce. Trade has ranged from $1,079.10 to $1,090.70
The yellow-metal turned higher as US employment cost index quarter-over-quarter in June came in at 0.2 percent, below the 0.6 percent and indicates a persisting slack in the labour market.
The dollar responded in a heavy selloff with the greenback last 1.2 percent softer at 1.1067 against the euro.
“The gold price was already looking weaker ahead of the US GDP data, with the result that there were no further price falls following publication of the figures,” Commerzbank said before the release of the ECI data. “The firmer US dollar also prevented any recovery movement, however.”
The ECI follows a strong US GDP reading released on Thursday which demonstrated an improving labour market and mirrored the moderately hawkish sentiment stated by the Federal Open Market Committee (FOMC).
In the FOMC minutes, the organisation was tight-lipped on the timing of the initial rate hike, but the intention of raising rates sometime this year remains.
HSBC’s Chief US economist Kevin Logan said that “the FOMC issued a neutral policy statement after its 28-29 July meeting, avoiding sending any signal that it is already planning for a rate hike at the next meeting in September.”
Logan added that the “FOMC may lack convincing evidence that inflation will move back towards its two percent target in the near term.”
Nonetheless, continual outflows of gold from ETFs are capping any real recovery in the metal’s price. Holdings in funds tracked by FastMarkets have decreased for 14 consecutive sessions and are now at their lowest since February 2009 at 1,537 tonnes.
In eurozone data today, German retail sales fell short at -2.3 percent as did French consumer spending at 0.4 percent and the Italian unemployment rate at 12.7 percent. Eurozone core consumer inflation however at one percent was better than the forecasted 0.8 percent while the flash estimate at 0.2 percent was as expected.
Chicago PMI and the University of Michigan’s consumer sentiment and inflation report are due for release later today.
Turning to equities, Germany’s DAX was down 0.1 percent, while France’s CAC-40 was up 0.2 percent.
As for other precious metals, Comex silver for September delivery declined 1.1 cents to 14.685 per ounce. Trade has ranged $14.510 to $14.730.
Platinum for October settlement fell $10.60 to 979.30 per ounce, while the most actively traded palladium contract was at $610.0 per ounce, down $10.55.
(Editing by Tom Jennemann)
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