US MIDDAY: gold lower

03 Jun, 2016

Gold was little changed on Thursday as the dollar turned positive after the European Central Bank said it made only marginal upward adjustments to its inflation projections, while investors remained cautious ahead of US labor data. The bank kept interest rates unchanged and ECB President Mario Draghi said inflation would likely remain very low or negative in the next few months.
Spot gold was down 0.1 percent at $1,210.96 an ounce by 1:54 pm EDT (1754 GMT). US gold futures settled down 0.2 percent at $1,212.60.
"You're kind of range bound until you're clear on what the trend is of the Fed and of the dollar," said Rob Haworth, senior investment strategist for US Bank Wealth Management in Seattle.
"You don't have any new news to change your view on Janet Yellen or what the Fed will do, and the big news is the job report tomorrow."
Investors will now focus on US nonfarm payrolls data on Friday. A solid reading could heighten expectations for a US interest rate move as early as the Federal Reserve's June 14-15 policy meeting.
"People are looking for confirmation whether the likelihood of a summer rate hike is going to increase even further," Julius Baer analyst Carsten Menke said.
Gold has taken a beating after the latest Fed meeting minutes released in May, and comments from key central bank officials, including Fed Chair Janet Yellen, boosted expectations of an imminent rate rise.
Higher interest rates increase the opportunity cost of holding non-interest yielding gold, while bolstering the dollar.
On Thursday, the euro declined while stock prices across major markets fell near one-week lows and the US dollar index turned up around 0.05 percent.
Data showed US private payrolls increased a less-than-expected 173,000 in May.
Spot silver rose 0.5 percent to $16.01 per ounce, after slipping to $15.77 on Wednesday, its lowest since April 12. Spot platinum fell as much as 1.4 percent at $953, its lowest since April 8, while palladium fell 2.1 percent to $533.23.

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