Gold drops after gaining 1% as investors await U.S. data

by Jonathan Adams
invest in gold

Spot gold was 0.5% lower at $2,335.97 per ounce, and U.S. gold futures were 0.6% lower at $2,355.50

Gold dropped on Tuesday after gaining 1% in the previous session as investors awaited U.S. jobs data due later in the week for further clues on the health of the labour market and if it will deter the Fed from reducing rates in September.

Spot gold was 0.5% lower at $2,335.97 per ounce, as of 0826 GMT. Prices hit their lowest level in almost a month on Monday before settling 1% higher.

U.S. gold futures were 0.6% lower at $2,355.50.

ADP employment report is due on Wednesday before Friday’s non-farm payrolls data.

If the payrolls data comes above 200,000, which is kind of very rosy, then gold prices might slip further and even break that $2,320 support level, according to Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

We do see technical factors that are still positive at least in the near term because it is still being supported at the $2,320 support level, with yesterday’s bounce reinforced by weaker-than-expected manufacturing numbers, which also caused the yields to drop.

Meanwhile, in major gold consumer India, share markets sold off sharply after early vote counting showed Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led alliance was not headed for a landslide win as predicted.

Just before the election results are out or during the election period, demand for gold will be subdued because of the restriction on cash transactions, according to ANZ commodity strategist Soni Kumari.

So once the election is over, we can expect some kind of pent-up demand because the wedding season is still not yet over, she added, adding that if equities continue to crash, there will be some funds going into gold as well.

Among other precious metals, spot silver dropped 2.5% to $30.01 per ounce, platinum was 0.4% lower at $1,008.00 and palladium shed 0.3% to $915.00.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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