Gold price falls to a one-week low as US data pushes the dollar higher

London (Nov 4)  Gold fell to a one-week low as consensus-beating US economic data pushed the dollar higher, outweighing the impact of a lacklustre jobs report.

The greenback gained on a strong reading of US factory orders and the services sector, reversing earlier losses after an underwhelming October jobs report.

Spot gold fell 0.7% to $1,266.91 during the day and was on track for a third straight weekly decline. It hit its highest lowest since October 27 at $1,265.16. US gold for December delivery dipped 0.8% to $1,275.71.

"The data was in a conflicting sequence but it is overall making the case for not just one further rate hike by the Fed in December but also for further, gradual increasing of rates in 2018," said Quantitative Commodity Research consultant Peter Fertig. "The outlook for the interest side remains towards a stronger US dollar so there are headwinds for gold."

The interest rate outlook for the coming year is largely unchanged by US President Donald Trump’s appointment of Jeremy Powell as Fed chairperson as analysts said it signaled a continuation of Janet Yellen’s cautious monetary policies.

"The general trend for gold over the past week has been positive, but the market will need to find a catalyst within the host of data released tonight to push through the strong resistance at $1,280," MKS PAMP analyst Tim Brown wrote in a note.

World stock markets dipped on Friday, putting them on track for their first decline in seven sessions in the wake of US payrolls data.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.4% on Thursday. Meanwhile, in Asia, demand for physical gold was lacklustre this week in top consumers India and China, while the lure of the metal remained stable in Singapore, but India’s peak wedding season is expected to usher in renewed interest for bullion in coming weeks.

Spot gold looks neutral in a narrow range of $1,263 to $1,281 an ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

In other precious metals, spot silver edged 1.3% lower to $16.87 an ounce and platinum eased 0.7% to $918.30, while palladium dipped 0.6% to $992.50.

Reuters

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