On Monday, gold hovered above $1,260 an ounce, holding steady to gains from its last session amid a weak report of U.S. nonfarm payrolls. The disappointing data put pressure on the dollar, as investors kept close watch on the developments in the overseas conflict with Ukraine. For a third consecutive week, money managers lowered bullish gold wagers, reflecting the retreat in prices that helped eliminate $1.6 billion from the value of bullion funds, reports Bloomberg.
Gold edges higher amid disappointing data
After the disappointing U.S. employment data, traders began to rethink their previous predictions for when the Federal Reserve will roll back its stimulus program.
According to Reuters, spot gold had lowered to $1,267.54 an ounce, following Friday's 0.6 percent gain. The loss was sparked by data that showed U.S. employers had hired the smallest number of workers in August than they had in eight months, creating further cause for the Federal Reserve to hold off on increasing interest rates.
The U.S. economy showed an increase of 142,000 jobs in August, far less than the forecasted increase of 225,000, according to the Department of Labor. The report also showed that the U.S. unemployment rate fell to 6.1 percent last month from 6.2 percent, according to Investing.com.
Last week, holdings in the SPDR Gold Trust dropped 1.2 percent to 785.72 tons, the biggest decline since May 2. This year's worldwide ETP holdings also fell 2.8 percent to 1,713.26 tons as of Sept. 4.
Gold is forecasted to see its first quarterly loss this year as the Institute for Supply Management's said on Sept. 4 that its non-manufacturing index rose to nine-year high. The survey covers a range of service industries that make up approximately 90 percent of the economy.
In the past year, futures declined 8.3 percent to $1,271.50 an ounce. The Bloomberg Commodity Index of 22 raw materials fell 4 percent, while the MSCI All-Country World Index of equities increased 15 percent. The Bloomberg Dollar Spot Index reached a 13-month high on Sept. 5.
Global gold market
Open interest in New York futures and options is close to a five year low, as the dollar and equities curb investor demand. Prices declined last week after Ukraine's government and pro-Russian separatists agreed on a cease-fire, while the dollar climbed to its one-year high against the euro due to the European Central Bank's decision to cut interest rates.
"The concern and fear we had in the marketplace a few weeks ago has subsided," Brian Hicks, a fund manager who helps oversee $350 million at U.S. Global Investors in San Antonio, said Sept. 5. "Europe's going to need to continue to provide stimulus, whereas here in the U.S., our central bank is going to be pulling back the reins. Those two trends will continue to push the dollar higher and be a headwind for gold," according to Bloomberg.
Beginning Sept. 22, the London Metal Exchange will not offer clearing services for over-the-counter trades in gold after the London Bullion Market Association announced that its members would stop providing price data for forward curves, reports Reuters.
Meanwhile, in other precious metals, copper for December delivery climbed 0.95 percent, or 3.0 cents, to trade at $3.200 a pound as expectation that new stimulus measures will be introduced by policymakers after signals of China's weakening economic growth.
Official trade data released Monday showed that Chinese exports were up 9.4 percent from last year, surpassing forecasts for an 8 percent increase. However, last month imports dropped 2.4 percent, coming in under expectations for a 1.7 percent gain, reports Investing.com. In August, the country's trade surplus expanded to a record high of $49.8 billion from $47.3 billion in July, compared to predictions for a surplus of $40.0 billion.
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