Gold futures are trading slightly higher early Monday despite a firmer U.S. Dollar. Weaker U.S. equity markets may be behind the move. The early strength is not expected to last if the Euro continues to weaken. Buyers also appear to be defending a pair of bottoms at $1263.80 and $1262.80.
At 1116 GMT, December Comex Gold is trading $1272.20, up $3.00 or +0.24%.
Helping to pressure gold futures are expectations of higher interest rates. This notion was supported on Friday with the release of the U.S. Non-Farm Payrolls report. Although the report was sluggish with the headline number and average hourly earnings coming in below expectations, it did show enough to determine that the labor market is continuing to strengthen and this is enough to keep the Fed on its path to raise interest rates.
As of Friday’s close, traders see a 90.2 percent chance of a rate hike at the central bank’s next meeting.
In other news, hedge funds and money managers reduced their net long position in COMEX gold contracts for the seventh straight week, in the week to October 31, Commodity Futures Trading Commission (CFTC) data showed on Friday.
There is very little economic news today so investors are likely to continue to react to the key events from last week including the Fed’s monetary policy statement, the release of the tax reform plan, the nomination of Fed Governor Jerome Powell as Fed Chair and the jobs report.
Gold is likely to continue to react to the movement in U.S. Treasury yields and the U.S. Dollar. Appetite for risk will also be seen as a key market driver.