Gold futures logged a back-to-back loss on Thursday, failing to find support even with the dollar and bonds yields edging down, as investors looked to August U.S. employment data due Friday to determine the path forward for the Federal Reserve and bullion.
Prices for the yellow metal have been “very much lifeless for the past few days as traders aren’t willing to pit big bets ahead” of the U.S. nonfarm payrolls data, Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.
The data is going to “lay the foundation” for the Federal Reserve meeting later this month, which is “highly anticipated to indicate that the Fed may tighten its liquidity bell,” he said.
fell by $4.50, or nearly 0.3%, to settle at $1,811.50 an ounce, following a decline of 0.1% on Wednesday. Prices trade around 0.4% lower week to date.
The August jobs data are “likely to bring the usual volatility in gold and precious metals,” said Adrian Ash, director of research at BullionVault.
Last Friday’s remarks from Fed Chairman Jerome Powell, at the Jackson Hole central-bankers symposium, revealed that he supports tapering the pace of bond purchases this year, but didn’t discuss when the Fed might formally announce the taper.
Commodity analysts say that Powell’s comments last week have made Friday’s U.S. monthly jobs update a yardstick for those hoping to glean insights on the possible timing and scope of the Fed’s rollback of accommodations, which could influence trading in gold.
Beyond that for gold, “the question this fall is whether the market thinks central bankers will dare to tighten policy faster than inflation raises the cost of living,” Ash told MarketWatch.
Trading for gold came against the backdrop of a dollar that was almost flat on the session. The ICE U.S. Dollar Index
a gauge of the dollar against a half-dozen currencies, was down 0.2% at 92.26, while the 10-year Treasury note yield
was at 1.297% from around 1.31% on Wednesday.
Gold has slipped in dollar terms, but bullion is suffering more in terms of the euro because it’s not only the U.S. that’s talking about tapering asset purchases, said Ash.
“The Austrian and Dutch hawks at the [European Central Bank] will struggle to create a cliff-edge for new [quantitative easing], same as at the Fed, he said. “But with Chile becoming the 13th central bank in August to hike its key interest rate last Monday, this week’s decline in gold reflects how the direction of monetary policy may be changing.”
Gold’s loss on Thursday also came on the heels of government data showing the number of people applying for U.S. employment benefits at the end of August fell to a new pandemic low, down by 14,000 to 340,000.
In other Comex trading, copper futures finished higher after posting a more than 2% loss on Wednesday. December copper
tacked on 0.6% to $4.30 a pound.
“Copper rebounded on Thursday as the Chinese central bank will take measures to support the economy after [Wednesday’s] weaker-than-expected Chinese PMI data, said Anna Stablum, commodities broker at Marex, in note. “The People’s Bank of China will provide 300 billion yuan ($46.4 bllion) to help small to medium-sized firms.”