Gold inches lower while stuck in sideways trading

The spot gold price inched lower during Asian trading hours on Friday amid Mid-Autumn festival holidays in the region.

Spot gold was last at $1,314.66-1,315.00 per ounce, down $1.17 from Thursday’s close. Trading ranged at $1,314.15-1,318.15 so far.

The spot gold price had tumbled to a week’s low of $1,307.75 on Thursday on selling pressures following a brief spike to $1,328.10 sparked by weak US retail sales data.

In data released Thursday, US retail sales and core retail sales in August both undershot at -0.3 percent and -0.1 percent respectively.

Industrial production month-over-month in August also disappointed at -0.4 percent – a -0.2 percent decline was called for.

“With nothing in the economic numbers to say US rates should be moving up, and growing signs of losing momentum, expectations have largely diminished towards the Fed doing anything in September and the market is drifting back towards the view they might do nothing for quite a while,” ANZ Research said on Friday morning.

The weak readings saw the Fed funds futures market pare down their expectations of a rate hike for this year – majority now does not expect a single rate hike for 2016, according to the CME Group FedWatch tool.

On Thursday, the probability assigned for September was just 12 percent, November was 19.3 percent and December was 46.2 percent. Earlier this week, majority had expected a rate hike in December.

In other US data released overnight, the US PPI in August was unchanged; a 0.1-percent gain from the previous month has been expected. The core PPI – excluding food and energy costs – was in line at 0.1 percent.

The Empire State manufacturing stood at -2.0 missed the expected -0.9 but the Philly Fed manufacturing index at 12.8 beat the predicted 1.1.

Capacity utilization rate in August stood at 75.5 percent, a touch below the 75.8 percent

Weekly unemployment claims for September 1-8 in at 260,000 were just below the forecast 262,000 and, more importantly, the psychological 300,000 mark.

Lastly, the current account balance in June was in line with consensus at -$120 billion. Business inventories month-over-month were unchanged in July, missing the 0.1 percent forecast.

“Gold prices are stuck sideways,” William Adams, head of research at FastMarkets, said.

“We feel prices will have to push up into new high ground to avoid further stale long liquidation and possibly short-selling. Our big-picture outlook remains bullish but more profit-taking could easily be triggered if the price action disappoints, as it may be starting to do,” he said. 

US data due later today includes CPI, core CPI, preliminary UoM consumer sentiment and preliminary UoM inflation expectations.

In gold news, Barrick Gold said its Veladero mine in Argentina has been temporarily suspended on orders of the San Juan provincial government pending further inspections of the mine’s heap leach area.

In currencies, the US dollar index rose 0.06 percent to 95.27 so far on Friday after dipping as low as 95.07 the previous day.

In other commodities, the Brent crude oil spot price fell 0.15 percent to $46.31 per barrel, while the Texas light sweet crude rose 0.23 percent to $43.66.

In other precious metals, silver was last at $18.96/19.01, down $0.005. Platinum was up $$0.50 to $1,027/1,034, while palladium slipped $1.50 to $650/657 recently on Friday.

Markets in China, Hong Kong, Taiwan, and South Korea are closed for Mid-Autumn festival celebrations.

(Additional reporting by Dalton Barker)

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