Gold inches down on profit taking, slowdown fears support metal
- U.S. gold futures fell 0.5% to $1,481.90 per ounce.
- Gold prices were affected (positively) last night by the manufacturing numbers, prompting some investors to book profits this morning.
- Lower interest rates reduce the opportunity cost of holding non-yielding gold.
Spot gold was down 0.2% to $1,475.95 per ounce as of 0638 GMT. Prices hit a near two-month low of $1,458.50 on Tuesday, before climbing as much as 1% during the session.
U.S. gold futures fell 0.5% to $1,481.90 per ounce.
Gold prices were affected (positively) last night by the manufacturing numbers, prompting some investors to book profits this morning, said Phillip Futures analyst Benjamin Lu.
But considering the risks to the global economy, gold is still a strong safe-haven asset, he added.
U.S. manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, fanning fears of a sharp economic slowdown and raising expectations that the U.S. Federal Reserve could further ease monetary policy.
The data also prompted President Donald Trump to lash out at the Fed, saying the central bank has kept interest rates "too high", with a strong dollar hurting U.S. factories.
"Gold might slide down to $1,455 levels in the short term as the market has nothing to reprice, until and unless the Fed cuts interest rates," Lu added.
Lower interest rates reduce the opportunity cost of holding non-yielding gold.
Markets now await U.S. non-farm payrolls data due on Friday to gauge the state of the world's largest economy amid its bitter trade war with China.
"I think the market does not want to rush ahead of the non-farm payroll data in case there is a surprise hit," said AxiTrader market strategist Stephen Innes.
"Investors are bit scared. This emotion will probably inhibit people from jumping back into the (gold) bandwagon over the near term. They are going to need some convincing."
On the technical front, spot gold may consolidate in a narrow range of $1,462-$1,488 per ounce, or bounce towards $1,514, as its short downtrend from the Sept. 4 high of $1,557 could have temporarily ended, according to Reuters analyst Wang Tao.
Among other precious metals, silver was little changed at $17.23 per ounce, platinum dropped 0.5% to$872.02 per ounce and palladium edged down 0.3% to $1,647.86 per ounce.