Gold steady as dollar weakens on low Sept rate hike prospects

Gold prices fluctuated between gains and losses on Tuesday, as investors’ expectations regarding the timing of a U.S.Federal Reserve rate rise were clouded with uncertainty. Spot gold was up 0.2 percent at $1,316.30 an ounce by 0052 GMT, but was on track to end the week down almost 1 percent.

The metal touched US$1,314.24 on Wednesday, the lowest intraday level since Sept 2, before recovering to close 0.3 per cent higher.

“A chorus of hawkish comments from Fed officials kept hopes alive for a September rate hike despite a recent spate of disappointing economic data, including only a modest rise in USA nonfarm payrolls”.

Markets are pricing in just a 15 per cent chance that the Fed will hike U.S. interest rates during its September 20-21 meeting, according to CME FedWatch.

“Most expect Fed president Janet Yellen to give some warm-up for December hiking in next week’s meeting”, said Jiang Shu, chief analyst at Shandong Gold Group. “The general trend will be a downward one”, said Lai, adding that prices would be below $1,300 by the end of this year and reach $1,100 by the end of next year.

“Higher interest rates make it more expensive to hold gold, which has zero yield”.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.1 percent to 95.535.

Spot gold looked neutral in a range of $1,319/oz-$1,330/oz, and an escape could point a direction, said Reuters technical analyst Wang Tao.

“Gold is approaching the important $US1,300-$US1,310 support zone, which has held incredibly well since the Brexit rally and will be a key focus for traders in the short term”, said Alex Thorndike, senior precious metals dealer at MKS PAMP Group.

“Despite equity market weakness, gold continues to trade heavily”, he added.

Among other precious metals, spot silver rose 0.3 percent to $19.04 an ounce.

Platinum fell 0.8 per cent to $1,049.50 an ounce and Palladium was down 0.5 per cent at $671.

Asian stocks firmed on Thursday after weak USA data reduced the already low chance of an interest rate increase by the Federal Reserve at next week’s meeting, sending the Treasury yield curve surging to its steepest level in 2-1/2 months.

Japanese manufacturers’ confidence bounced from a three-year low, while sentiment in the services sector hit its lowest since 2013 when the central bank began bold monetary stimulus, a Reuters poll showed, underscoring a fragile economic recovery.

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