Gold snaps 2-day losing streak; U.S. data in focus
Singapore (Mar 4) Gold edged higher on Wednesday following two days of losses, although caution prevailed as the dollar held near 11-year highs ahead of major U.S. economic data.
Spot gold rose 0.1 percent to $1,204.74 an ounce by 0747 GMT. The metal had fallen to a one-week low of $1,194.90 on Tuesday before paring its losses to close above $1,200.
Despite the gains, the metal could remain under pressure due to expectations of robust U.S. economic data and higher U.S. interest rates, plus investor outflows from bullion funds.
"In the short term, the mood is still bearish though we
might trade in a tight range until the jobs data on Friday,"
said a trader in Hong Kong.
"Exchange-traded funds are seeing some big outflows, so that
could also add to the pressure if U.S. data is better than
expected," he said.
Gold is likely to trade in a $1,200-$1,220 range leading
into the jobs data, according to MKS Group.
Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.35 percent to 760.80
tonnes on Tuesday, the second straight day of outflows. That
followed a near-8-tonne fall on Monday, the biggest outflow this
year.
The bullion market is closely following U.S. data to gauge
when the Federal Reserve might raise rates. A U.S. Institute for
Supply Management services report is due later in the day, ahead
of the February nonfarm payrolls report on Friday.
A robust economy could prompt the Federal Reserve to raise
interest rates soon which could hurt non-interest-bearing
bullion and boost the dollar.
Seven of the Fed's 17 members have said they want the option
of a rate rise in June on the table, or have pushed in general
for an earlier increase, in the expectation that wages and
inflation will turn higher.
The greenback held firm near an 11-year high versus a basket
of major currencies on Wednesday.
Traders were also keeping an eye on the euro, which has been
subdued over the past few sessions ahead of a European Central
Bank policy meeting on Thursday and the implementation of its
government bond buying programme due to start this month.
Source: Reuters
