Gold hovers near 1-week low as dollar firms on US data

Sept 7 – Gold prices lingered near a one-week low on Thursday following five consecutive sessions of losses as the dollar sat atop mid-March highs after data showed the US services sector unexpectedly gained steam in August.

Spot gold was flat at USD 1,918.14 per ounce by 0535 GMT, and hovered close to its lowest level since Aug. 29 hit in the previous session. US gold futures edged 0.1% lower to USD 1,942.30.

Weighing on greenback-priced gold, the US dollar was perched at its highest since March 16 and the benchmark US Treasury yield rose after stronger-than-expected US services sector data on Wednesday suggested that inflationary pressures remain.

“While the Fed is done with tightening for the current cycle, what remains highly uncertain is the outlook on Fed cuts in 2024,” said OCBC Executive Director and FX Strategist Christopher Wong.

“Gold may continue to stay depressed until Fed’s dovish pivot comes into sight.”

Higher US interest rates raise the opportunity cost of holding gold, which does not earn any interest.

Boston Fed President Susan Collins on Wednesday called for the US central bank to take its next monetary policy steps carefully, while acknowledging signs of progress in cooling inflation.

US economic growth was modest amid a cooling labour market and slowing inflation pressures in July and August, a Fed report showed on Wednesday.

Policymakers expect persistently slower growth in top bullion consumer China, seeing its transition from an infrastructure- and investment-led economy to becoming consumption-driven as “difficult”.

Data earlier in the day showed top metals consumer China’s exports fell 8.8% in August year-on-year, while imports contracted 7.3%.

SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.4% on Wednesday.

Silver eased 0.4% to USd 23.09 per ounce, platinum rose 0.1% to USD 909.73 and palladium dropped 1.2% to USD 1,200.55.

(Reporting by Deep Vakil in Bengaluru; Editing by Rashmi Aich and Sherry Jacob-Phillips)