WSJ: Gold Edges Lower as Traders Await U.S. Employment Data
LONDON—Gold prices were trading slightly lower on the London spot market Thursday, as traders watched for clues on the direction of monetary policy from European Central Bank and awaited employment data out of the U.S.
Spot gold was down 0.30% at $1,130 a troy ounce in morning European trade, having traded lower on Wednesday as the dollar traded higher and gains in equity markets tempered investor appetite for the haven asset.
Investors are focusing on U.S. nonfarm payrolls data, due Friday, said Simona Gambarini, a commodities economist at Capital Economics. The numbers are seen as a key indicator of the strength of the U.S. economy.
“That’s an important data point to establish whether the Fed will raise rates” this month, Ms. Gambarini said. “So there’s a bit of volatility because of that.”
On Wednesday, data showed that private-sector payrolls in the U.S. in August expanded at a more modest-than-expected pace.
A U.S. interest rate rise could increase the dollar’s value and make U.S. Treasury bills a more attractive investment. Gold competes better with interest-yielding assets when rates are very low. On Thursday, the WSJ Dollar Index, which measures the U.S. dollar against a basket of currencies, was up slightly.
Market participants were also awaiting the news conference from the European Central Bank that will follow the September meeting of the currency bloc’s members. Earlier, the ECB left its interest rates unchanged at record lows.
Investors will be watching to see whether ECB President Mario Draghi will increase or extend the bank’s quantitative easing program, according to Commerzbank. QE typically keeps interest rates lower, while releasing more cash into the economy, potentially stoking inflation. By comparison, gold is a hard asset than can hold its value comparatively well and is used as a hedge against inflation.
“This could give the gold price in euros a boost,” the bank said in a daily note.
Still, analysts predict a quiet end to the week after days of volatility in this, and other, metals. A national holiday in China is expected to limit trading in Asia.
The other precious metals were higher Thursday. Spot silver was up 0.27% at $14.72 an ounce, while spot platinum was up 0.10% at $1,014.60 an ounce and spot palladium was up 0.69% at $587.40 an ounce.
