(Bloomberg) — Gold slipped as the dollar advanced after latest data pointed to a still-healthy US labor market, potentially leaving the door open for the Federal Reserve to continue carrying out an aggressive path of interest rate hikes.
Most Read from Bloomberg
Applications for US unemployment insurance fell for the first time in three weeks, Labor Department data showed Thursday, with initial claims decreasing by 2,000 to 250,000 in the week ended Aug. 13. The median estimate in a Bloomberg survey of economists called for 264,000 applications. A gauge of manufacturing activity in the Philadelphia area unexpectedly expanded in August for the first time in three months. A gauge of the greenback advanced after the print, while the benchmark 10-year Treasury yield inched lower.
Gold’s “main headwind has been continued dollar strength only being partly offset by softer yields” today, said Ole Hansen, Saxo Bank head of commodity strategy. “The claims support the strong job market view,” giving the Fed room for more aggressive rate hikes.
Still, bullion has been trading in a tight range recently as traders with bullish wagers continue to believe the Fed will be successful in bringing down inflation without hurting growth to much, according to Hansen.
“We believe inflation will remain stronger than expected thereby supporting a long position in gold, also considering we are into the final furlong of the bear market bounce in stocks,” Hansen said.
US central bankers on Thursday offered divergent signals over the size of the next interest-rate hike, with St. Louis’s James Bullardurging another 75 basis-point move while Kansas City’s Esther Georgestruck a more cautious tone.
Meanwhile, some geopolitical risks have reared up again with the US and Taiwan planning to start formal talks on a trade and economic initiative, following through on a long-planned promise to deepen ties amid opposition from China, underpinning haven demand for bullion.
Spot gold fell 0.1% to $1,759.46 an ounce by 3:43 p.m. in New York, after earlier trading between a gain of 0.6% and a decline of 0.4%. Bullion for December delivery slipped 0.3% to settle at $1,771.20 on the Comex. The Bloomberg Dollar Spot Index was was up 0.6%. Spot silver and platinum fell while palladium advanced.
Most Read from Bloomberg Businessweek
©2022 Bloomberg L.P.