Gold hovers near five-year trough ahead of Friday's jobs report

Gold hovers near five-year trough ahead of Friday's jobs report

6 August 2015, 09:33
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On Thursday gold prices struggled near the lowest level in more than five years, amid lingering bets that the Federal Reserve was on track to raise interest rates in September.

The key outside markets were bearish for the precious metals today, as the U.S. dollar index was firmer and crude oil prices were lower.

Comex gold for December delivery lost 30 cents, or 0.03%, to trade at $1,085.30 a troy ounce during European morning hours after hitting a session trough of $1,082.70 overnight.

On Wednesday, gold lost $5.10, or 0.47%, to close at $1,085.60. Futures fell to a five-and-a-half year low of $1,072.30 on July 24.

In July gold prices lost $79.50, or 6.72%, - the biggest monthly drop since June 2013.

The yellow metal has been under heavy selling pressure in recent months amid speculation the U.S. central bank will raise interest rates in September for the first time since 2006. Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Despite Wednesday's negative ADP report, most market players were betting the rate hike will come as soon as September, supported by remarks from Atlanta Fed President Dennis Lockhart, a voting member of the Federal Open Market Committee, who told the Wall Street Journal the Fed is ready to raise U.S. interest rates in September. The Fed official’s comments also helped to pressure the gold market and U.S. Treasuries.

Friday’s jobs report and the one in September will be extra important to the market place, as the Fed weighs whether to raise interest rates at its September FOMC meeting.

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