Strong dollar trips up gold

Bengaluru — Gold prices dipped on Monday as the dollar strengthened, while investors awaited key US jobs data to firm their bets on the size of Federal Reserve’s interest rate cut expected in September.

Spot gold was down 0.3% at $2,494.76/oz by 3.30am GMT. US gold futures held steady at $2,527.20.

The dollar hit a near two-week peak, making greenback-priced bullion less appealing to other currency holders.

The Fed is expected to kick off a rate-cutting cycle at its policy meeting on September 17-18. Traders currently see a 69% chance of a 25 basis point (bp) cut and a 31% chance of a 50bp cut, according to the CME FedWatch tool.

“The lead-up to the US nonfarm payrolls may put gold prices in their near-term range to start the week. Investors look towards a series of economic data to help resolve the debate between a 25bp and a 50bp cut for the upcoming Fed meeting,” IG market strategist Yeap Jun Rong said.

Major data due this week are the ISM surveys, Job Openings and Labor Turnover Survey (Jolts), ADP employment and the nonfarm payrolls report. For the payrolls report, due Friday, a Reuters poll predicted 165,000 headline jobs created in August and a dip in the unemployment rate to 4.2%.

Spot gold fell 1% in the previous session after data showed that US consumer spending increased solidly in July, arguing against a half-percentage-point rate cut.

“Nevertheless, the recent move to an all-time high continues to be well-defended for gold prices,” said Yeap.

Non-yielding bullion tends to thrive in a low interest rate environment.

Spot silver fell 1.5% to $28.41/oz, platinum gained 0.3% to $928.50 and palladium was up 0.1% at $966.43.

Manufacturing activity in key metals consumer China swung back to growth in August, a private sector survey showed, supporting employment and lifting confidence about the outlook.

Reuters