BULLION LATEST 02/11: Spot gold price edges higher; focus on Fed chair announcement

The spot gold price edged higher during Asian morning trading on Thursday November 2, finding support from a weaker dollar after the US Federal Reserve left interest rates unchanged on Wednesday and as investors awaited the announcement of a new chair for the central bank.

The spot gold price was quoted at $1,279.65-1,279.95 per oz as of 03:53 GMT, up by $4.55 from the previous session’s close. Trade has ranged from $1,275.20-1,281.45.

  • The dollar has weakened slightly after the Fed, as expected, left US interest rates unchanged on Wednesday.
  • The dollar index was 94.51 as of 02:42 GMT on Thursday, this compares with 94.67 at around the same time on Wednesday.
  • The Fed’s statement effectively provided the ‘all clear’ for a rise in US interest rates next month, according to ANZ Research.
  • “Gold prices were slightly higher after the Fed chose to leave rates unchanged. Comments suggested its views on the economy hadn’t changed, with its gradual approach to rate hikes remaining,” ANZ Research noted.
  • Market focus has now fallen to US President Donald Trump’s nomination of the next chair of the central bank - with Fed governor Jerome Powell widely tipped to replace current Fed chair Janet Yellen.
  • Rising expectations that Trump will pick Powell, who is seen as more dovish on interest rates, have put pressure on the dollar this week.
  • The yellow metal has also found fundamental support this morning on increased buying activity from Chinese investors.
  • “Gold has frustrated traders over the last five days … [However] that may be about to change as Asian physical buying makes an appearance early in the session. The primary driver appears to be a widening of the Shanghai arbitrage between the Shanghai Gold Exchange and offshore market, with the premium paid by Chinese retail investors flowing through to offshore buying,” Jeffrey Halley, senior market analyst at OANDA said.
  • “The return of Chinese investor interest in gold at these levels is a welcome vote of confidence for long-suffering gold bulls. It may suggest that having held the long-term support at $1,260, gold may have seen a medium-term low for now,” Halley added.

Silver, PGMs

  • In the other precious metals, the spot silver price was up $0.050 to $17.135-17.175 per oz. Platinum increased $4 to $931-936 per oz and palladium gained $4 to $1,002-1,007 per oz.
  • On the Shanghai Futures Exchange, gold for December delivery was recently at 273.85 yuan ($41.50) per gram, and the December silver was at 3,874 yuan per kg.

Currency moves and data releases

  • The dollar index was at 94.51 as of 02:42 GMT, this compares with 94.67 at around the same time on Wednesday.
  • In other commodities, the Brent crude oil spot price rose by 0.13% to $60.55 per barrel and the Texas light sweet crude oil spot price rose by 0.04% to $54.28 per barrel.
  • In US data on Wednesday, the final manufacturing purchasing managers’ index (PMI) came in at 54.6, above the forecast of 54.5, while the ISM PMI surprised to the downside with a reading of 58.7, compared with an estimated print of 59.5 ¬- though a reading above 50 still indicates growth.
  • In a preview of the October jobs report, the ADP non-farm employment change stood at 235,000, better than the 202,000 estimate and above the previous reading of 110,000.
  • Meanwhile, US crude oil inventories decreased by 2.4 million barrels during the past week, against an expected decline of 1.5 million barrels.
  • The economic agenda is heavy today with manufacturing PMI data out across Europe, UK construction PMI, the Bank of England’s (BOE) monetary policy summary and official bank rate and US data that includes unemployment claims, preliminary non-farm productivity and preliminary unit labor costs.
  • In addition, BOE governor Mark Carney and US Federal Open Market Committee member William Dudley are speaking.
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