Gold extends bounce off 3-1/2-month lows after ADP disappoints
Investing.com
Published Oct 05, 2016 08:35AM ET
Gold extends gains after ADP data disappoints
Investing.com - Gold prices pushed higher during North America's session on Wednesday, extending its overnight bounce off a three-and-a-half-month low after U.S. non-farm private employment rose much less than expected in September, dampening optimism over the health of the labor market.
Gold for December delivery on the Comex division of the New York Mercantile Exchange rose $9.15, or 0.72%, to $1,278.85 a troy ounce by 8:35AM ET (12:35GMT). The contract fell to $1,268.60 earlier, a level not seen since June 24.
On Tuesday, prices plunged $43.00, or 3.28%, its biggest one-day percentage drop since September 2013, as the U.S. dollar climbed to a two-month high and stocks rose.
Payroll processing firm ADP said non-farm private employment rose by 154,000 last month, below forecasts for an increase of 166,000. The economy created 175,000 jobs in August, whose figure was downwardly revised from a previously reported increase of 177,000.
Market players looked ahead to more U.S. economic data for further clues on the likelihood of a December rate hike. At 10:00AM ET (14:00GMT), the U.S. Institute of Supply Management is to publish its index of non-manufacturing activity for September, amid forecasts for a reading of 53.0. In August, the gauge dropped to 51.4, its weakest level since February 2010.
A pair of Fed policymakers are also due to make public appearances on Wednesday that may offer insight into how divided they are about raising rates. Minneapolis Fed President Neel Kashkari will speak at 9:30AM ET (13:30GMT), while Richmond Fed President Jeffrey Lacker is due at 1:00PM ET (17:00GMT).
Markets are currently pricing in around a 15% chance of a rate hike in November, according to Investing.com's Fed Rate Monitor Tool . For December's meeting, odds were at nearly 64%.
Gold is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion.
The dollar index, which measures the greenback's value against a basket of six major currencies, was flat at 96.10 early Wednesday, not far from the prior session's two-month peak of 96.38.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
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Written By: Investing.com
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