MANILA — Gold edged higher on Tuesday as equities faltered on the mounting expectation that the US Federal Reserve is likely to go ahead with an interest rate increase in September.
Fed vice-chairman Stanley Fischer said on Saturday that US inflation was likely to rebound as pressure from the dollar faded, allowing the US central bank to raise interest rates gradually.
Mr Fischer’s comment sent Wall Street lower overnight and US stock futures stretched losses on Tuesday, with Asian shares also falling, led by China. The dollar similarly weakened as risk aversion favoured the euro and yen.
"We are seeing some general risk-off moves in the Asian timezone and some buying of gold would be consistent with that," CMC Markets chief market analyst Ric Spooner said in Sydney.
Spot gold was up 0.5% at $1,139.60/oz by 1.53am GMT, after an uneventful session on Monday.
Bullion ended August 3.5% higher as worry over China’s slowing economy sparked safe-haven bids, although the metal has since come off a seven-week top.
Growing indications that the Fed could lift rates at its next policy meeting on September 16-17 could limit gold’s upside potential.
Mr Spooner said only another "fear-based" deep rout in global equities like that seen on August 24 following a slump in Chinese stocks would "dissuade the Fed from easing".
"And I think if we did see a very strong number in the nonfarm payrolls this week, it would certainly give them an opportunity ... to make their move in September," he said.
But Mr Spooner said there was a chance that the US rate hike — which would be the first since 2006 — could induce profit-taking in the dollar and potentially buoy gold.
US gold for December delivery rose 0.6% to $1,139.20/oz.
MKS Group trader James Gardiner said he expected resistance for bullion at $1,145 and then at $1,150 with immediate support around $1,125.
Spot palladium fell 0.8% to $594.05/oz and platinum eased 0.1% to $1,005.50. Silver edged up 0.2% to $14.63.
