The gold price is on the comeback trail today after a round of economic data out of America sent the US dollar lower against major currencies.
At 5.46pm (GMT) the gold price was trading at US$1,113 an ounce up from US$1,308 in yesterday’s trading.
ISM manufacturing PMI figures from the US hit the market today at 49.4, well down from last month’s figure of 52 with a number below 50 showing the sector in contraction mode.
The numbers pressured the US dollar which was good for the gold price as it tends to move in the opposite direction of the American currency,
“While the drop in ISM manufacturing might have normally acted as a headwind, the bottom fell out in the U.S. dollar adding a bid to the price of gold,” said Adam Koos, president of Libertas Wealth Management Group.
Further movement in the precious metal is expected tomorrow with the release of the non-farm payrolls figure as well as the unemployment rate from the US which is expected to be the decisive factor in whether the US Federal Reserve decides to lift interest rates this month.
Strong employment numbers are likely to see the gold price pull back sharply on anticipation of a rate rise which will likely to see the US dollar jump.
“If the official U.S. labor market data that are due to be published tomorrow turn out to be as good as the ADP’s [private-sector hiring] figures that were published yesterday, the gold price is likely to come under further pressure,” said Carsten Fritsch and the commodities team at Commerzbank, in a note.
“This is because this would presumably add further fuel to expectations of a U.S. Federal Reserve rate hike before September is out.” they added
If a disappointing figure is released to the market this will like support the gold price as it will push back rate hike expectations until early next year.Publication source