Gold extends gains on lower oil and softer greenback, markets await US jobs data
A subdued US dollar makes greenback-priced metals more attractive to holders of other currencies
Add BT as a preferred source
[BENGALURU] Gold rose for a third straight session on Wednesday (Aug 5), helped by a softer US dollar and lower oil prices, while investors awaited US jobs data for clues on the interest rate outlook.
Spot gold was up 1.3 per cent at US$4,127.04 per ounce, as at 0253 GMT. US gold futures rose 0.8 per cent to US$4,184.40.
The US dollar remained subdued, making greenback-priced metals more attractive to holders of other currencies.
Oil steadied after steep falls in the previous two sessions. Lower oil prices can ease inflation concerns that often feed expectations of higher interest rates.
Qatar said mediators were making progress in efforts to end the US-Iran war, although Teheran has denied US President Donald Trump’s assertion that talks are already underway.
“Gold’s relation with oil is still intact as oil prices have a tremendous impact on the global economy in terms of inflationary pressure. If we get a very clear roadmap to further de-escalation in tensions, gold prices could move higher,” said Kelvin Wong, a senior market analyst at OANDA.
Traders are now pricing in a 59 per cent probability of a US Federal Reserve interest rate hike at the central bank’s Sep 15 to 16 meeting, down from 67 per cent a day earlier.
Gold tends to lose its appeal in a high-interest rate environment despite its status as an inflation hedge, as it yields no interest.
Federal Reserve Bank of Philadelphia president Anna Paulson said she was keeping an “open mind” about what lies ahead for monetary policy in an outlook that could call for higher rates.
Traders were looking ahead to the ADP employment report due later in the day and the July payrolls report scheduled for Friday.
Analysts at TD Securities said in a note that they expect gold to remain range-bound near current levels.
Spot silver gained 1.9 per cent to US$60.64 per ounce and platinum climbed 1.4 per cent to US$1,758.35, its highest level since mid-June.
Palladium rose 0.9 per cent to US$1,365.62, up for a second straight session. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
