Metals In The Red

Gold dipped in the Asian session as the US dollar edged up. Gold is trading at 1087.90 ahead of the NFP report. Silver is taking its cues from gold to touch 14.645 while platinum added $2.10 to 953.60. Gold edged higher yesterday, supported by the retreating US dollar and a tumble in global equities as traders awaited US employment data seen as key to determining when the Federal Reserve may raise interest hikes.

US non-farm payrolls data are due in the North American session and economists polled by Reuters predict employment in July increased at the same pace as June’s 223,000 rise.

The dollar was down against a basket of major currencies. Weak earnings dragged stocks lower.

“We’re seeing a mild consolidation rally,” said Bill O’Neill, co-founder of commodities investment firm LOGIC Advisors in New Jersey.

“The dollar has lost a little ground and we have nervousness surrounding equities.” Investors have abandoned bullion during a broad commodities sell-off and on expectations that the Fed may raise interest rates as early as next month.

Reports yesterday showed the number of Americans filing new applications for unemployment benefits rose less than expected last week. Expectations that the Fed could increase rates at its next policy meeting in September gained ground this week after Atlanta Federal Reserve President Dennis Lockhart said only a “significant deterioration” in the US economy would make him not support a rate rise next month.

But Fed Governor Jerome Powell said policymakers had not yet decided whether to raise rates next month, adding that more recent employment data had been mixed.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 21.47 million ounces on Wednesday, the lowest since September 2008.

In other metals, copper reversed its trend falling 11 points to 2.334 as the US dollar gathered momentum. The US dollar climbed to 97.97 up by 9 points. Inventories in Chinese warehouses fell in July for the first time in four months after smelters were said to be hoarding metal on viability issues. The stock slid 4 per cent to 650,000 tonnes.  Prices for copper and other raw materials have been hammered in recent months, as the market is hit with a combination of ample supply and weaker demand from China, the world’s top commodity consumer. Copper, which is used extensively in manufacturing and production, is down 15% from its June peak.