Gold prices fell as the mixed USA payrolls data failed to allay uncertainty over the prospect of a near-term interest rate hike from the Federal Reserve, analysts said. The metal benefits from ultra-low interest rates, which cut the opportunity cost of holding bullion while also putting pressure on the dollar. Liquidity is likely to be thin on Monday as the United States markets are closed for the Labor Day holiday.
The most actively traded gold futures contract, for December delivery, was recently trading down $2.30, or 0.2%, at $1,122.20 a troy ounce on the Comex division of the New York Mercantile Exchange.
Meanwhile, Richmond Fed President Jeffrey Lacker said on Friday that the USA economy no longer needs interest rates near zero, fueling further speculation over a possible rate hike as soon as this month.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, were unchanged for a fifth day on Thursday at 682.59 metric tons, the highest since July 23rd, but remain about 49.5% below a peak of 1353.35 tons in December 2012.
Shares rose in Europe and Asia while the dollar lost ground against the euro after trade data from China and Germany highlighted the divergent outlooks of the two heavyweight economies.
“Gold is awaiting the payroll data for indications of Fed intentions at the September FOMC meeting”. Gold prices in India have been trading at a discount on the world market price for the first time since mid-July, which suggests weak physical demand there. People’s Bank of China Governor Zhou Xiaochuan said in a statement on the bank’s website Saturday that the rout in Chinese equities is close to ending. Economists say initial estimates of payrolls in August have tended to disappoint compared with consensus projections, but they are typically revised higher in ensuing months.
In Australia, gold coin and minted bar sales at the Perth Mint dipped in August.
Among other precious metals, silver was down 1.4 percent at $14.56 an ounce.
Gold prices surged to $1,133.10 an ounce in response to the headline number, but they pulled back as investors sifted through the data and considered its likely impact on the Federal Reserve’s upcoming monetary-policy decision, said Bob Haberkorn, a senior commodities broker with RJO Futures in Chicago.