Gold consolidates after Tuesday’s sell-off, awaits US jobs data

Gold edged higher on Wednesday morning in London after a strong dollar sent the yellow metal plunging on Tuesday – a consolidation phase is likely to be the theme ahead of Friday’s blockbuster jobs data.

The spot gold price was last at $1,271.30/1,271.60 per ounce, up $3.55 on Tuesday’s close. Trade has ranged from $1,266.60 to $1,275.25 so far.

Gold traded as low as $1,266.75 on Tuesday, succumbing to pressure from dollar strength, a heavy unwinding of sizeable long positioning from the speculative trading community and technical selling, Chris Weston, a market analyst at IG, said.

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

The dollar index peaked at 96.44 on Tuesday, its highest since August 9. It was last slightly weaker at 96.08.

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

If Friday’s employment release is broadly in line with the monthly average of 180,000 jobs so far this year – a reading of 171,000 is forecast this week – expectations that the Fed will raise interest rates at its December meeting are likely to increase further, the bank said.

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

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

In the other precious metals, silver was last at $17.850/17.870 per ounce, little changed from the previous close and around its lowest since the end of June. Platinum at $991/997 was $9 higher but also around its weakest since the end of June while palladium at $690/698 was unchanged.

(Editing by Mark Shaw)

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