Gold price under pressure from dollar; US jobs data awaited

Gold remained under pressure  from a stronger dollar on the morning of Thursday, October 6 in London.

The spot gold price at $1,264.20/1,264.60 per ounce was down $3.85 on the previous close. Trade has ranged from $1,263.10 to $1,269.65 so far.

“Participants turn their focus toward Friday’s NFP print after the slightly disappointing ADP result overnight, with the 200 DMA at $1,259 the first support, while $1,250-1,255 below this the key for the metal,” MKS said. “Leading into Friday’s jobs release gold is likely to sit in a $1,260-1,280 range.”

Stronger-than-expected US economic data is boosting the odds that the Federal Reserve raises rates in December, keeping the dollar index firmly about 96 – it was recently at 96.28. 

The US final services PMI for September came in at 52.3, above the estimated 51.9, and the ISM non-manufacturing PMI over the same period at 57.1 was better than economic consensus of 53.1. Factory orders month-over-month in August ticked up 0.2 percent, beating the forecast -0.4 percent.

The ADP non-farm employment change at 154,000 jobs was, however, below the forecast of 166,000. While the figure is seen as a precursor to the official jobs report due on Friday, expectations are still for the official number to reach 172,000, up from August’s reading of 151,000.

“In sum, the economy is improving into Q4, which should provide the FOMC confidence to raise rates in December,” ANZ Research said.

With no October meeting and a presidential election approaching, December is widely seen as the last possible time for the Fed to restart the normalisation of interest rates this year – market participants reckon there is a 60-percent chance of this happening, according to the CME Group FedWatch tool.

“The lower prices may well prompt pent-up physical demand as well as encourage more investment bargain hunting,” William Adams, FastMarkets’ head of research, said. “But better economic data may dry up the safe-haven buying for a while. We would expect choppy trading for a few days while the market adjusts to these lower prices and to Friday’s US employment report.”

In the other precious metals, spot silver was recently quoted at $17.695/17.720 per oz, little changed from the previous close. Platinum edged $1 lower to $970/976 and palladium at $673/678 was unchanged.

(Editing by Mark Shaw)

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