Gold Up, U.S Economic Data

In Asia on Wednesday morning, gold was up. While a sinking dollar boosted the yellow metal, it was trapped in a limited range as investors awaited the following U.S. jobs data.

Gold futures had risen 0.09 per cent to $1,815.80. The dollar, which usually moves in the opposite direction of gold, fell on Wednesday and was close to previous lows.

Like the currency markets, gold appears to be in a holding pattern. Gold’s price action remains consolidative yet structurally positive. The converging 100- and 200-day moving averages signal a breakout is on the way, and I expect Friday’s U.S. data will be a catalyst, says Jeffrey Halley, senior market analyst for the Asia Pacific at OANDA.

On the data front, investors are looking forward to the ADP non-farm employment change for July. Also anticipated later in the day are the Markit composite manufacturing purchasing managers’ index (PMI), services PMI, and Institute of Supply Management (ISM) non-manufacturing PMI.

The data comes ahead of the most recent U.S. jobs report, which is due on Friday. Other Fed officials chimed in after Fed Chairman Jerome Powell reiterated that interest rate hikes are a long way off as the Fed handed down its policy decision this week.

The labour market

The labour market would take time to recover from the consequences of COVID-19. Additional work is needed to bring the economy fully back on track. Mary Daly, president of the San Francisco Fed, agreed with Bowman.

The Bank of England and the Reserve Bank of India will publish their individual policy choices on Thursday and Friday. In Asia, China’s Caixin services purchasing managers’ index (PMI) was 54.9 in July, according to data released earlier in the day. The reading was higher than the previous month’s reading of 50.3. On Tuesday, SPDR Gold Trust (P: GLD) holdings declined 0.2 per cent to 1,027.97 tons.

Silver increased by 0.4 per cent, while platinum increased by 0.1 per cent. Palladium rose 0.2 per cent to $2,652.99 per ounce after reaching a one-week high of $2,707.28 during the previous session.

Oil prices

Oil prices in the United States fell for the third day in a row on Wednesday. Brent futures remained relatively constant, owing to growing concerns that the expanding spread of the Delta version of the coronavirus in major consuming countries may reduce fuel consumption.

As of 0647 GMT, West Texas Intermediate (WTI) crude in the United States was down 7 cents, or 0.1, to $70.49 per barrel. Brent crude oil prices were up a penny to $72.42 a barrel. Both futures sank to their lowest levels since July 21 before recovering some ground at the close.

The world’s two largest oil consumers, the United States and China deal with quickly growing outbreaks of the highly contagious Delta form. Researchers fear it will reduce gasoline demand at a time when it typically surges in both countries. Stockpile data from the United States also supported prices, like crude oil, distillate, and gasoline inventories fell.

According to two market sources quoting American Petroleum Institute numbers released on Tuesday, crude stockpiles declined by 879,000 barrels in the week ending July 30.