Gold Can’t Shake Negative Sentiment Tied to Rate Hikes

By Anonymous

Gold futures slipped Monday even as the dollar languished just below the even mark, temporarily snapping the pair’s typically inverse relationship. A hangover from a strong jobs report shaped downbeat precious metals trading.

December gold fell $2.20, or 0.2%, to $1,198.10 an ounce. The precious metal logged a weekly decline of about 0.5% last week, enough to bump the string of weekly losses to eight in the past nine.

The ICE U.S. Dollar Index , a popular measure of the buck’s strength against a basket of six rivals, has gained 3.5% so far this year, creating a headwind for dollar-pegged commodities. It slipped in early Monday action ahead of key policy meetings for the Bank of England and the European Central Bank this week.

The U.S. created 201,000 new jobs in August, keeping the unemployment rate at an 18-year low of 3.9%. The strong jobs report is seen as supporting the Federal Reserve’s intention to hike rates in September, which already is expected, and possibly once more in December. The policy-setting Federal Open Market Committee is slated to convene its two-day gathering on Sept. 26.

Boston Federal Reserve President Eric Rosengren said in an interview with MarketWatch that he does not read much about a possible recession from the shape of the yield curve. Atlanta Fed President Raphael Bostic is also slated to make remarks, speaking at an event in Georgia at noon Eastern Time.

An August survey of consumer expectations is slated to hit at 11 a.m. Eastern, and a July reading on consumer credit is expected at 3 p.m. Eastern.

“The [gold] market has spent the past week fluctuating around $1,200, but with the strong payrolls report on Friday, there has been a slip back which is threatening to test the key near term support at $1,189 again,” said Richard Perry, analyst at Hantec.

“The bulls would have been hoping to leave this support [at $1,189] behind in their recovery, for it to play out as another higher low above $1,183 but this is now under pressure today,” Perry said. “A breach of $1,189 would not be decisively negative, but a move below $1,183 would be a significant blow as it would once more open the $1,160 key low.”

In other trading, December silver was up 5 cents, or 0.4%, at $14.22 an ounce early Monday after last week’s loss of 2.7%. December copper fell 1 cent, or 0.4%, to $2.611 a pound after ending around 1.8% lower on the week.

October platinum rose 0.7% to $785.50 an ounce, while December palladium added 0.1% to $969.30 an ounce.

Among the exchange-traded funds, the SPDR Gold Shares (GLD) fell 0.3%, down about 0.3% for last week. The iShares Silver Trust (SLV) gained 0.2%, after logging a weekly loss of 2.6%. The VanEck Vectors Gold Miners ETF (GDX) fell 0.3%, after it suffered a 4.1% loss last week.

Write to Rachel Koning Beals; 415-439-6400; [email protected]