Gold price stages modest recovery, investment demand rises

Gold futures were steadier on the morning of Wednesday, October 5 in the US after tumbling to a three-month low yesterday although technical support levels have been breached and the backdrop remains downbeat.

Gold for December settlement on the Comex division of the New York Mercantile Exchange rose $7.40 or 0.6 percent to $1,277.10 per oz. On Tuesday, the contract dipped below $1,270, its lowest since June 23.

The yellow metal came under considerable pressure yesterday after the dollar surged to a multi-month high, fuelled by better-than-expected US manufacturing data. At one point, the dollar index peaked at 96.44 – it was was recently at a slightly weaker 96.08.

Investors are now awaiting Friday’s blockbuster jobs report, which is expected to show 171,000 Americans joined the labour market last month. In a precursor to that figure, the ADP non-farm employment change at 154,000 jobs was below the forecast of 166,000.

Currently, around 60 percent of investors expect the Federal Reserve to raise rates in December. With no October meeting and a presidential election approaching, December is widely seen as the last possible time for the Fed to restart interest rate normalisation this year.

“Rising rate hike expectations had lent buoyancy to the US dollar yesterday,” Commerzbank said. “Besides strengthening the US dollar, this also resulted in higher bond yields, which reduced gold’s attractiveness as an alternative investment and thus prompting the selling on the gold market.”

In paper gold, investors added 1.95 tonnes to their holdings overnight to bring the total to 2,136 tonnes, the highest since June 13.

“The sell-off has begun, with gold taking out several key support levels. In the short term, conditions remain challenging and the bulls’ resilience will be tested,” Andy Farida, an analyst at FastMarkets, said.

In European markets, Germany’s DAX and France’s CAC-40 were both down 0.3 percent, while the dollar was virtually unchanged at $1.1206 against the euro.

As for other commodities, Comex silver for December settlement regained 16 cents or 0.9 percent to $17.935 per oz. Trade has ranged from $17.755 to $18.040.

Platinum for January delivery dipped $1.30 or 0.1 percent to $989.20 per oz, while the most active palladium contract was last at $685.05 per oz, down $15.50.

(Editing by Mark Shaw)

The post Gold price stages modest recovery, investment demand rises appeared first on The Bullion Desk.

from The Bullion Desk http://ift.tt/2d32Fqw
via IFTTT