Gold price steady after four-day gain
Gold has risen by two per cent since a sharp slide last week bottomed out at $1,117.35, but traders remain wary of taking up fresh positions until they receive more clarity on when the Fed will press ahead with its first rate hike in nearly a decade.
“Attention is already turning to the data releases today and later in the week, the ADP payrolls and then the non-farm payrolls on Friday,” Mitsubishi analyst Jonathan Butler said.
“Attention will inevitably turn to the fact that December is now looking the most likely for lift-off on rates, and maybe the market will start to price that in.”
Gold has benefited from the current low interest rate environment, which cuts the opportunity cost of holding non-yielding bullion while pressuring the dollar. It is down nearly 4 percent this year, largely on expectations that rates will rise.
On the wider markets, European shares fell 0.5 percent after a weak session in Asia overnight, as weak manufacturing reports from China, the United States and Europe fueled worries about slowing global growth. [MKTS/GLOB]
“For now, interest to buy (gold on) dips is evident, yet it is also understandable for investors to be somewhat hesitant to put on sizeable long positions two weeks ahead of the (Federal Reserve) meeting,” UBS said in a note.
“A weaker-than-expected payroll print on Friday is likely to ease that hesitation.”
From a technical perspective, gold is well placed to test the 2015 downtrend at $1,163 an ounce as long as it holds above last week’s low, Commerzbank’s technical team said in a note.