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Gold ticks up, but holds near 11-week low on US rate outlook
[SINGAPORE] Gold ticked up on Monday after a three-day losing streak, but was still hovering near an 11-week low as a strong US jobs report boosted expectations for a US interest rate hike in September.
Spot gold inched up 0.2 per cent to US$1,173.90 an ounce by 0307 GMT.
The metal had fallen to US$1,162.35 on Friday, its lowest since March 19, after data showed US job growth accelerated sharply in May and wages picked up. Nonfarm payrolls increased 280,000 last month, the largest gain since December.
The report, indicating signs of strong momentum in the US economy, bolstered expectations the Federal Reserve will begin to raise rates in September and sent the dollar rallying to a 13-year peak against the yen.
"The technicals of the markets have deteriorated to such an extent that they will now likely drive precious prices lower, as the theme of a stronger dollar and the imminent rise in US rates again dominates sentiment," said analyst Edward Meir.
Higher US rates could diminish demand for non-interest-paying bullion, while a stronger dollar makes gold more expensive for holders of other currencies and reduces the metal's safe-haven appeal.
Investor positioning in bullion continued to reflect bearish sentiment.
Further outflows were seen in SPDR Gold Trust, the world's top gold-backed exchange-traded fund, with holdings dropping 0.17 per cent to 708.70 tonnes on Friday, the lowest since mid January.
Hedge funds and money managers cut net long positions in gold and silver during the week ended June 2, US Commodity Futures Trading Commission data showed on Friday.
"Gold ETF holdings are near their 2015 lows and seem to be contributing to gold's gradual decline since mid-May," said MKS Group trader James Gardiner. "Higher bond yields and a stronger dollar are also continuing to put pressure on the metal." Benchmark 10-year US Treasury yields posted their steepest weekly jump in nearly two years on Friday after the jobs report.
The next major support level for gold is around the March low of US$1,142, although there are also signs of strong support in the mid-to-low 60s, he said.
In mining news, South Africa's Association of Mineworkers and Construction Union said on Sunday it will launch a wildcat strike if its rival union and gold mining companies impose a wage deal on its members.
Strikes could potentially lower production levels and lend support to prices.