Gold price edges higher as U.S. Sept rate rise prospects wane
New York (Sept 6) Gold prices edged higher onTuesday as the dollar weakened on expectations that the U.S.Federal Reserve will not raise interest rates at its Septemberpolicy meeting.
Spot gold rose 0.4 percent to $1,330.52 an ounce by0955 GMT while U.S. gold futures were 0.5 percent higherat $1,332.70.
The metal hit a two-month low of $1,301.91 last Thursday onfears that a strong non-farm payrolls report for August couldput the Fed on track to raise rates soon. Gold bounced back,however, when the data missed expectations. "An isolated rate hike in September would not have asubstantial negative impact on gold," Danske Bank senior analyst Jens Pedersen said.
"What would be important for the gold market is whether arate hike this year signals that now the Fed is ready to speedup the hiking cycle, because then the whole normalisation ofrates would be back on the agenda."
Gold is highly sensitive to rising U.S. interest rates,which increase the opportunity cost of holding the non-yieldingasset while boosting the dollar, in which the metal is priced.
New U.S. data releases and any speeches from Federal Reserveofficials will be watched closely for clues as to the timing ofany rate increases.
"The idea that the Fed is going to move, if not in Septemberbut in October, is limiting people from buying gold," saidDominic Schnider of UBS Wealth Management in Hong Kong, addingthat prices could drop below $1,300 in the short term, with agood resistance level of $1,275.
Spot gold may retrace to a support at $1,315 per ounce, asit failed again to break through resistance at $1,330, accordingto Reuters technical analyst Wang Tao. Among other precious metals, spot silver touched anear three-week high of $19.59 an ounce.
Platinum was outperforming the rest of the complex,up 1.5 percent at $1,085.80 an ounce. Palladium rose 0.7percent to $684.50.
South Africa's biggest platinum mine workers' union and theindustry have failed to reach a deal on pay, the union said onMonday, raising the prospect of industrial action in the world'stop producer of the white metal.
Source: KitcoNews
