Gold prices down slightly in Asia with focus on U.S. jobs report

Gold prices down slightly in Asia with focus on U.S. jobs report

3 September 2015, 06:58
86 - Gold prices dipped in Asia on Thursday with investors squarely focused on U.S. jobs data at the end of the week.

On the Comex division of the New York Mercantile Exchange, gold for December delivery fell 0.09% to $1,132.60 a troy ounce. Silver for December delivery eased 0.08% to $14.655 a troy ounce.

Copper for December delivery was down 0.04% at $2.324 a pound.

In the U.S., analysts are bracing for a relatively weak U.S. jobs report on Friday for the month of August after forecasts from the ADP Research Institute fell sharply below consensus estimates on Wednesday. In its National Employment Report, ADP estimated that U.S. non-farm payrolls increased by 190,000 in August, significantly under estimates of a 210,000 gain.

In July, U.S. private payrolls increased by 215,000 as the unemployment rate remained steady at 5.3%. A soft reading on Friday could convince the Federal Reserve to delay a potential interest rate hike beyond September.

Overnight, gold futures fell mildly on Wednesday amid a sharply higher dollar, as investors await a key meeting of European policymakers and critical U.S. employment data later this week for further indications on the direction of global interest rates.

A number of metal traders were hesitant to make any major moves during Wednesday's session ahead of a meeting of the European Central Bank's Governing Council on Thursday afternoon. Investors could be looking from signals from ECB head Mario Draghi on the viability of the bank's €60 billion a month quantitative easing program, which was launched in March. Previously, the ECB was on course to extend the bond-buying program through September, 2016 before a wave of economic shocks in China and soft commodity prices rattled global markets in recent weeks.

In August, inflation in the euro zone inched up by only 0.2% on a yearly basis, far below the ECB's targeted goal of 2%. During its last long-term estimate in June, the ECB forecasted inflation to reach 1.8% in 2017. If the ECB signals that it could continue the bond-buying initiative beyond next September, it might provide indications that it expects inflation to remain lower over the next several years.

Gold is viewed as a safe haven for investors in periods of severe economic instability.

Gold, which is not attached to interest rates or dividends, struggles to compete with high-yield bearing assets in rising rate environments.


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