Gold consolidates after Tuesday’s plunge

The spot gold price consolidated during Asian trading hours on Wednesday after a strong US dollar sent the yellow metal plunging on Tuesday.

Spot gold was last at $1,272.45-1,272.85 per ounce, down $4.75 from Tuesday’s close. Trading ranged at $1,266.60-1,272.80 so far – the lower end of the range is a fresh three-month low.

The spot gold price fell to as low as $1,266.75 on Tuesday. This came on a combination of US dollar strength, a heavy unwind of sizeable long positioning from the speculative trading community and technical selling, Chris Weston, a market analyst at IG, said in a report on Wednesday.

“A break of $1,266 would now be key for a move back into $1,200,” he said.

The US dollar index had climbed as high as 96.44 on Tuesday, the highest since August 9. It has eased 0.11 percent to 96.00 so far on Wednesday.

“The US dollar has made a firm start to the fourth quarter as optimism over a [Hillary] Clinton victory and growing confidence that US economic activity may accelerate helped support the currency,” ANZ Research said on Wednesday morning.

If Friday’s employment release is broadly in line with the monthly average of 180,000 so far this year, expectations of a December rate hike are likely to increase further, the bank said.

The US will release its September jobs report on Friday and 171,000 jobs are expected to have been added in the month.

The market currently sees a 59-percent chance of a December US rate hike, according to the CME Group FedWatch tool.

In US data, the ADP non-farm employment change – which will offer a preview to Friday’s official numbers – is due later today, as well as trade balance, final services PMI, ISM non-manufacturing PMI, factory orders and crude oil inventories.

In other commodities, the Brent crude oil spot price rose 0.11 percent to $51.34 per barrel, and the Texas light sweet crude oil spot price increased 0.12 percent to $49.24 so far on Wednesday.

In equities, the Dow Jones Industrial Average closed 0.47 percent lower at 18,168.45 on Tuesday.

In other precious metals, silver was last at $17.92/17.96, up $0.15. Platinum rose $7 to $989/995, and palladium increased $6.50 to $696/705 recently on Wednesday.

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