Gold Recovers To Trade Slightly Higher; Jobs Data Big Focus Of Week

(Kitco News) - Gold futures recovered from overnight weakness Monday, largely moving inversely to the U.S. dollar as markets continue to digest comments from Federal Reserve officials at their weekend symposium in Jackson Hole and while waiting for a key report on the U.S. labor market at the end of the week.

As of 1:25 p.m. EDT, Comex December gold was $1.10 higher to $1,326.90 an ounce. December silver was up 11.5 cents to $18.86.

The euro recovered to $1.11843 from an earlier low of $1.11580.

The precious metal initially came under pressure at the start of Asia-Pacific trading, with the December contract sliding to a two-month low of $1,317.20 an ounce. Analysts at the time blamed this on U.S. dollar gains in the aftermath of hawkish comments from Fed Chair Janet Yellen and Vice Chair Stanley Fischer, hinting at a possible U.S. interest-rate hike, as last week was winding down.

December gold was confined to a narrower-than-normal range for the day of $11.10, perhaps in part because London trading was closed for a holiday and many U.S. traders were away from their desks for late-summer vacations. Eventually, the December contract clawed its way back into slightly positive territory.

“The dollar came off of its highs,” said Charlie Nedoss, senior market strategist with LaSalle Futures Group, about the impetus for the metal’s recovery. Further, he said, gold only briefly dipped below the $1,320 area that he had been viewing as chart support.

George Gero, managing director with RBC Wealth Management, pointed out that gold was able to withstand “headwinds” from Yellen and other Fed speakers last week suggesting potential tightening. The metal was helped by ideas by many – although not all – market participants that any tightening probably won’t occur until December, Gero explained.

He pointed out that September is when the U.S. presidential election will be heating up, thus Fed policymakers may want to avoid looking political by acting then. “And then of course they don’t want to look like the Grinch that stole Christmas,” he continued, explaining that policymakers may be careful to avoid hurting holiday sales.

“While everyone at the (Fed) conclave in Jackson Hole seemed to echo the chair making the strong case for a rate hike this year, it’s not imminent,” Gero said.

Nedoss said he looks for gold to largely consolidate at the lower end of its trading range this week heading into Friday’s monthly U.S. employment report. Traders will be watching to see if there is another surprise to the upside, such as the 255,000 job gains reported for July. Expectations compiled by various news organizations so far call for nonfarm payrolls to rise by around 175,000 to 184,000.

The next major U.S. report is The Conference Board’s consumer-confidence index due out Tuesday at 10 a.m. EDT. Consensus expectations are for little change at a reading of around 97.0 to 97.3, compared to 97.3 in July.

Nedoss listed chart support for December gold in the neighborhood of $1,320 an ounce, then the 100-day moving average that stood at $1,301.50 as he spoke.

On the upside, he listed technical resistance initially around $1,340, roughly around the 10-day average of $1,339.70 and 50-day average of $1,339.50. Next resistance was put at the 20-day moving average of $1,345.50.

By Allen Sykora of Kitco News; asykora@kitco.com