Gold price treads water on rate hike views; falling stocks support
New York (Sept 12) Gold was little changed on Monday as asell-off in equities increased the safe-haven appeal of theyellow metal, with expectations of a rate hike this month by theU.S. Federal Reserve keeping gains in check.
Spot gold held steady at $1,329.60 an ounce at 0653GMT. U.S. gold futures edged 0.1 percent lower at$1,328.30 an ounce.
A chorus of hawkish comments from Fed officials kept hopesalive for a September rate hike despite a recent spate ofdisappointing economic data, including only a modest rise inU.S. nonfarm payrolls.
"A pick-up in focus on the Fed speakers certainly means thatevery word will be closely analysed. It is going to create alittle bit of volatility going forward," ANZ analyst DanielHynes said.
"Expectations are increasing about a potential hike in ratesthis September. That alone will see investors reduce their longpositions over the coming days."
After Boston Federal Reserve President Eric Rosengren spokeon Friday, odds on a rate hike in September rose to 30 percentprobability from 24 percent before his comments. Asian shares skid on Monday with investors rattled by risingbond yields and the talk the Fed might be serious about liftingU.S. interest rates as early as next week. "We expect gold to continue to be under modest pressure,especially if expectations about a September Fed rate movecontinue to become more firmly entrenched," INTL FCStone analystEdward Meir said in a note.
Declines in equities could offer a measure of support andkeep heavier selling from materializing, Meir said.
Fed governor Lael Brainard is scheduled to give a talk inChicago later on Monday, a day before the central bank'scommunications blackout period takes effect.
A hawkish speech would likely put bullion under distinctselling pressure, HSBC analyst James Steel said.
"However, if rate concerns really rattle the financialmarkets, more profound equity market declines could set offrenewed 'safe-haven' purchases," Steel said.
Hedge funds and money managers hiked their net long positionin COMEX gold contracts to a nine-week high in the week to Sept.6, and they also raised a bullish stance in silver, U.S.Commodity Futures Trading Commission data showed on Friday. SPDR Gold Trust , the world's largest gold-backedexchange-traded fund, said its holdings fell 1.12 percent to939.94 tonnes on Friday. Spot silver shed 0.4 percent to $18.95. The metaltouched its lowest since Sept. 2 at $18.75 per ounce.
Platinum fell 0.4 percent to $1,054 an ounce andPalladium was down 0.7 percent at $670.30.