IV:Gold futures inch higher as dollar weakens; Fed in focus
Investing.com - Gold futures inched higher on Thursday, as a broadly weaker U.S. dollar boosted appetite for the precious metal amid ongoing uncertainty over the future of the Federal Reserve's stimulus program.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,292.40 a troy ounce during European morning hours, up 0.55%.
The December contract settled up 0.2% at USD1,285.30 a troy ounce on Wednesday.
Gold futures were likely to find short-term support at USD1,272.10 a troy ounce, Wednesday’s low and resistance at USD1,319.85, the high from August 5.
Gold prices were higher due to a broadly weaker U.S. dollar, as dollar-priced commodities become cheaper to investors holding other currencies when the greenback weakens.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.15% to trade at 81.17, the lowest level since June 19.
A weaker dollar also prompted some traders to return to the market and cover short positions ahead of the release of a weekly report on U.S. initial jobless claims later in the trading day.
Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
Cleveland Fed President Sandra Pianalto said Wednesday there has been “meaningful improvement” in the labor market and that tapering may be warranted if it continues to strengthen.
Her comments echoed similar remarks made by Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart earlier in the week.
The precious metal is on track to post a loss of 24% on the year amid concerns the Fed will start to unwind its stimulus program by the year's end.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
Elsewhere on the Comex, silver for September delivery rose 1.2% to trade at USD19.74 a troy ounce, while copper for September delivery rallied 2.4% to trade at USD3.248 a pound, the strongest level since June 11.
Market sentiment improved after official trade data released earlier showed that Chinese exports rose 5.1% from a year earlier in July, beating expectations for a 3% increase and following a 3.1% drop in June.
The data showed that imports surged 10.9%, blowing past forecasts for a 2.1% increase and following a 0.7% decline in June.
The country’s trade surplus narrowed to USD17.8 billion for the month from a surplus of USD27.1 billion in June.
The upbeat report eased concerns over a slowdown in the world’s second-largest economy and biggest consumer of the industrial metal.
Market players now looked ahead to a raft of Chinese economic data on Friday, including reports on inflation, industrial production and retail sales.
