Gold Prices Edge Slightly Higher, Gains Capped

October 5, 2017

New York (Oct 5)  Gold prices edged slightly higher on Thursday as investors eyed upcoming U.S. data and speeches by Federal Reserve officials, but gains were expected to remain limited, as Wednesday's upbeat U.S. economic reports continued to support demand for the dollar.

Comex gold futures were up $1.65, or about 0.13%, at $1,278.46 a troy ounce by 03:30 a.m. ET (07:30 GMT), still close to Tuesday's eight-week low of $1,271.00.

The greenback remained supported after the Institute of Supply Management reported on Wednesday that U.S. service sector activity expanded at its fastest rate in 12 years in September. The data came shortly after payrolls processor ADP said the U.S. private sector added 135,000 jobs last month, beating analysts' projections.

But the greenback's gains were capped amid speculation the next Fed head could be less hawkish than expected continued to weigh. Fed Governor Jerome Powell and former governor Kevin Warsh were both interviewed at the White House last week to replace current Fed Chair Janet Yellen next February. The two men are seen as serious candidates, but Powell is considered as more dovish than Warsh, who has criticised the Fed's bond buying programme in the past.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 93.30, still close to Tuesday's one-and-a-half month high of 93.78.

Gold is sensitive to moves in the dollar. A weaker dollar makes gold less expensive for holders of foreign currency.

Jerome Powell was scheduled to speak about the Treasury Markets Practices Group at the Federal Reserve Bank of New York later Thursday, while Federal Reserve Bank of Philadelphia President Patrick Harker was also set to deliver a speech in Texas.

Market participants were also looking ahead to U.S. data on unemployment claims, trade balance and factory orders due later Thursday for further indications on the strength of the economy.

Elsewhere on the Comex, silver futures edged up 0.10% to $16.64 a troy ounce.

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