Market Digest

Gold eyes biggest monthly drop since 2016

1 July, 2021 12:00 AM printer

NEW YORK: Gold was hovering around an over two-month low on Wednesday as investors awaited U.S. jobs data for further clarity on the Federal Reserve’s policy stance, with the precious metal heading for its worst monthly drop since November 2016.

Spot gold eased 0.1 per cent to $1,759.48 per ounce as of 0717 GMT, having touched its lowest since April 15 at $1,749.20 on Tuesday. U.S. gold futures lost 0.2 per cent to $1,759.30, report agencies.

Bullion prices are down 7.7 per cent for the month, weighed down by the Fed’s sudden hawkish shift. But they are up 3 per cent for the quarter.

“Gold has consolidated near the lows since the Fed’s strategy shift on monetary policy and it is now awaiting U.S. economic data for further guidance,” said DailyFX currency strategist Ilya Spivak.

“Non-farm payrolls on Friday is going to be the main driver for the market in the near term, if it shows higher wage inflation and strong job growth, we’ll see the next floor in gold.”

U.S. non-farm payrolls are likely to rise by 690,000 jobs this month, compared with 559,000 in May, according to a poll.

Fed Governor Christopher Waller said on Tuesday he was “very optimistic” about the economy and that the central bank could start raising interest rates next year. A Fed rate hike will increase the opportunity cost of holding bullion, dulling its appeal.    On the technical side, the failure of gold to break through the 100-day moving average was a bearish sign that could prompt so far patient exchange-traded fund (ETF) investors to join in on the selling, ANZ said in a note.