September 1, 2016
Gold Holds Monthly Drop as Payrolls in Focus for Data-Driven Fed
(Bloomberg) - Gold held last month’s decline as investors await U.S. jobs data due Friday for further clues on the timing of an interest rate increase.
Bullion for immediate delivery was 0.2 percent higher at $1,310.89 an ounce at 10:38 a.m. in Singapore, according to Bloomberg generic pricing. The metal dropped to $1,304.29 on Wednesday, the lowest level since June 24, and lost 3.1 percent in August.
Gold’s gains in 2016 have been dented after Federal Reserve officials indicated a greater likelihood of tightening before the end of the year. Traders will scrutinize Friday’s payrolls report in light of Fed Vice Chairman Stanley Fischer’s comment on Tuesday that the bank will base decisions at its Sept. 21 meeting on data. Figures from ADP Research Institute on Wednesday showed that companies added workers in August in line with projections.
The ADP data “indicates that the momentum in the U.S. labor market recovery is continuing,” Vyanne Lai, an economist at National Australia Bank Ltd., said by e-mail. “A similar outcome from the U.S. non-farm payrolls number this Friday is likely to weigh on gold market sentiment.”
Bill Gross, the billionaire manager of the Janus Global Unconstrained Bond Fund, is recommending that the Fed raise interest rates twice by as early as March, with the first hike at this month’s meeting. Futures show a 36 percent chance of action then, up from 18 percent at the start of August.
The speculation about the Fed’s next step has helped the dollar to recover, blunting gold’s appeal. The Bloomberg Dollar Spot Index rose in August to post the first monthly increase since May.
Holdings in bullion-backed exchange traded funds lost 11.3 metric tons to 2,021.3 tons on Wednesday, data compiled by Bloomberg show. This was the biggest decline since Aug. 12.
In China, bullion of 99.99 percent purity fell 0.3 percent to 282.30 yuan a gram ($1,314.80 an ounce) on the Shanghai Gold Exchange.
On the Shanghai Futures Exchange, gold for December delivery was little changed at 283.25 yuan a gram, while silver rose 0.2 percent to 4,172 yuan a kilogram.
Spot silver added 0.4 percent, platinum was little changed and palladium advanced 0.3 percent.