Gold price edges lower as focus shifts to U.S. payrolls data

London (Aug 30)  Gold fell on Tuesday after Federal Reserve officials sounded a hawkish note on interest rates at the weekend, boosting the dollar, while attention turned to U.S. payrolls data this week for further clues on the pace of rate hikes.

Fed Chair Janet Yellen said on Friday the case for higher rates was strengthening, though she gave little clarity on when it would move. Shortly afterwards Vice Chair Stanley Fischer
suggested a hike was possible as soon as September.

Spot gold was down 0.3 percent at $1,319.47 an ounce at 0931 GMT, while U.S. gold futures for December delivery were down $4.50 an ounce at $1,322.50.

The pace of rate hikes is heavily dependent on U.S. economic data. Non-farm payrolls data due on Friday is seen as a key measure of the strength of the U.S. labour market, and could
reinforce hawkish messages from Yellen and other Fed officials.

"For this week, the focus is on one thing and one thing only, which is the U.S. non-farm payrolls," Think Markets chief
market analyst Naeem Aslam said. "This is the final piece of the
puzzle which will enable the Fed to make their timeline decision
with respect to a rate hike."
    Gold is highly sensitive to rising U.S. interest rates, as
these increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar, in which it is priced.
    The dollar rose 0.2 percent against the euro on Tuesday as
investors focused on the next set of U.S. data to see whether it
supports expectations the Fed will raise interest rates soon.
 
    Employers are expected on Friday to show 180,000 job gains
in August, according to a Reuters poll, below the
better-than-expected 255,000 additions in July and 292,000 gains
in June.
    Further comments are also awaited from Fed Vice Chair
Fischer, who is due to appear in a TV interview at 1030 GMT.
    "With investors pricing in a greater likelihood of a Fed
rate increase before year end, pressure is likely to continue to
weigh on gold," MKS said in a note. "Next focus for traders will
be on today's Fischer speech, and Friday's employment data to
gain more insight."
    Silver was down 0.5 percent at $18.74 an ounce,
having hit a two-month low of $18.36 in the previous session.
    Platinum was 0.1 percent higher at $1,075.60, while
palladium was down 0.3 percent at $693.47. Platinum's
discount to gold narrowed to $244 an ounce, from a near
seven-week high of $253 an ounce at the end of last week.

Source: Reuters