Spot gold fell 0.1% to $1,967.14 per ounce by 0736 GMT, but was set for a 0.6% rise this week. On Thursday, the metal slipped from a two-month high as the dollar and bond yields climbed on stronger-than-expected U.S. labour market data. [USD/][US/]
U.S. gold futures fell 0.1% to $1,969.30.
Gold prices have been supported by expectation that the Fed would increase rates for the last time next week in its current tightening cycle. Most economists polled by Reuters expect a 25-basis point hike at the July 25-26 Fed meeting.
Lower interest rates reduce the opportunity cost of holding zero-yielding bullion.
Gold is seeing some “pre-positioning ahead of next week’s FOMC (Federal Open Market Committee) meeting,” said Ilya Spivak, head of global macro at Tastylive, highlighting that the Fed had earlier signalled against easing rates in the near-term.
“Seeing significant deterioration in labour markets that appears to give the Fed a convincing reason to back off would be gold-supportive. Without that, a run toward all-time highs seems unlikely, absent some unexpected shock,” said Spivak.
The dollar index slipped 0.1%, but was headed for a weekly rise, while benchmark U.S. Treasury yields were higher.
Gold’s failure to break a resistance at $1,984 is likely to be followed by a deep correction or a resumption of the downtrend from $2,072.19, said Reuters technical analyst Wang Tao. [TECH/C]
