Gold Steady As Weak U.S. Jobs Data Emerges

Gold held steady on Monday after climbing as much as over 1 percent in the previous session as a weaker-than-expected U.S. jobs data trimmed expectations of a Federal Reserve rate hike in September.

U.S. employment growth slowed more than expected in August after two straight months of robust gains and wages were tepid.  Gold is up 25 percent this year as uncertainty in U.S. growth pushed the Federal Reserve to consider holding off raising interest rates this year, and as the Brexit left traders considering an economic slowdown in Europe. Higher rates reduce the appeal of gold, which doesn’t pay interest or offer returns like assets such as bonds or equities.

“The disappointment in the nonfarm payrolls data has been translated into optimism for gold prices at the moment. We can expect prices to further rebound to $1,350 in a short-term,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

Spot gold was mostly unchanged at $1,324.16 per ounce by 0347 GMT. The metal rose 0.9 percent to $1,324.65 on Friday.

U.S. gold futures were up slightly at $1,327.90.

“Gold should continue to see interest support following Friday’s jobs data as the chances of an interest rate rise in September pull back,” MKS PAMP Group precious metals trader Sam Laughlin said in a note.

“The pricing on Monday morning has been quiet and we expect it to remain so with New York out tonight. The support broadly sits around $1,315 – $1,320, while bulls will be looking for a break above$1,330,” Laughlin said.

Spot gold may retrace to a support at $1,315 per ounce, as it failed to break a resistance at $1,330, according to Reuters technical analyst Wang Tao.

On Friday, Richmond Federal Reserve Bank President Jeffrey Lacker said the U.S. economy appears strong enough to warrant significantly higher interest rates.

Wall Street’s biggest banks are sticking to bets that the Fed will raise interest rates once this year, and the increase would most likely occur in December after a tepid employment report for August quashed most talk of a move as early as this month.

Hedge funds and money managers reduced their bullish stance in COMEX gold contracts in the week to Aug. 30 to the lowest in nearly three months, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

“Longs (positions) have been suffering from price correction and would be quite hard for them to sustain when prices are volatile. Speculators have to cut losses somehow,” Wing Fung analyst To said.  But opinions vary and for every seller there is a buyer with an alternative view.

“Traders are bidding up gold because they think the jobs number isn’t strong enough to justify two rate hikes this year,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said by telephone.

Gold futures for December delivery gained 0.7 percent to settle at $1,326.70 an ounce at 1:47 p.m. on the Comex in New York, erasing a weekly loss.