The Federal Reserve has tied the prospect of a rate hike to the strength of US data.
San Francisco Fed President John Williams on Thursday renewed his call for an interest-rate hike “sometime later this year“, citing near-full employment and rapidly rising house prices that may be a sign of excessive economic optimism. Bullion fell as low as $US1,111.60 on Wednesday, its lowest level since September 16, after a report showed that USA private employers added 200,000 jobs in September, beating a forecast for 194,000 among economists polled by Reuters.
“Gold will continue to track moves in the dollar, as it is very sensitive to USA monetary policy”, said a precious metals trader.
The team headed by Chairman Janet Yellen over at the Federal Reserve took the time to be explicit that a rate hike is coming. “With data like that, I don’t see how the Fed is going to be in a position to raise rates”.
Even before the Volkswagen scandal broke last week, the market had been suffering from an increase in supplies following the end of last year’s five-month strike among platinum miners in major producer South Africa, and a weakness in Chinese jewellery demand.
Platinum, which is most commonly used in diesel autocatalysts, was trading near multiyear lows on the back of persistent concerns that demand for diesel-engined cars could suffer, following revelations that the German vehicle maker fitted 11 million of its diesel cars with “defeat device” technology to bypass strict USA auto-pollution regulations. Silver was up 0.5 per cent at $US14.63 an ounce, while palladium was up 1.7 per cent at $US654.75 an ounce.
A few market players said that anticipation of the U.S. nonfarm payrolls was also moving the platinum price.
Generally, the increase of interest rate will boost the exchange rate of dollar. US December gold futures settled down $1.50 an ounce at $1,113.70. Earlier in the day, copper prices rallied to $2.3765 a pound, the highest level since Sept. 22, after China’s official manufacturing purchasing managers’ index rose to 49.8 in September from 49.7 a month earlier.
Among other metals, silver for December delivery gained 3.5 cents (0.24 percent) to close at $14.573 per ounce.
Palladium fell 2.2 percent to $648.47 an ounce, following a near 10-percent jump last week, its biggest weekly gain since December 2011.