Gold price rangebound after quiet Asian session

Otmane El Rhazi from The Bullion Desk.

The gold price was effectively unchanged on Wednesday morning in low volumes and amid rising equities.

Spot gold was last at $1,085.40/1,086.20 per ounce, down $1.20 on Tuesday’s close, having traded in an intraday range of just $4 so far. Asian trade appears to have set the tone for the session, with small volumes on the Shanghai Gold Exchange.

The dollar is stronger at 1.0853 against the euro ahead of the blockbuster US jobs report on Friday – a reading of 220,000 is forecast, down from the June reading of 223,000 – and today’s precursor, the ADP non-farm payroll change.

“Market participants are focusing on the US employment report due this Friday and price action over the last couple of days suggest overall reluctance to take significant positions ahead of the data release,” UBS’ Edel Tully said.

In a speech, Atlanta Fed president Dennis Lockhart asserted that the US economy was ready for an increase in interest rates. He also claimed that the only thing that would prevent him from voting for the increase in September would be considerably poorer economic data.

“The market responded by pricing in a rate hike in September with a likelihood of 50 percent for the first time this year,” Commerzbank said. “Against this backdrop, we believe that gold is still holding its own relatively well at just shy of $1,090.”

Equities are also faring better this morning in Europe, with all major indices currently in positive territory, keeping investors away from the likes of precious metals.

ETF outflows have also continued for more than two weeks – holdings in the funds tracked by FastMarkets fell another 2.65 tonnes to 1,525 tonnes on Tuesday, the lowest since February 2009.

Silver was down one cent at $14.52/14.57 per ounce, platinum was $2 lower at $949/954 and palladium slipped $1 to $592/597.

In data, the Chinese Caixin services PMI was better than expected at 53.8 and the EU final services PMI at 54 was slightly better than the expected 53.8. But EU retail sales at -0.6 percent missed the expected -0.1 percent.

Alongside the ADP non-farm employment change, the trade balance and the final services and ISM non-manufacturing PMIs are due from the US later today.

(Editing by Mark Shaw)

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