Gold edges lower on US dollar strength, softer oil prices

The spot gold price edged lower during Asian trading hours on Wednesday amid a stronger US dollar and weaker crude oil prices.

Spot gold was last at $1,325.30-1,325.60 per ounce, down $1.70 from Tuesday’s close. Trading ranged at $1,324.95-1,327.65 so far.

The US dollar index rose to as high as 95.67 on Tuesday, boosted by stronger than expected US economic data. The index was last at 95.58 so far on Wednesday, up 0.12 percent.

The US flash services PMI in September was at 51.9, beating expectations of 51.1 and August’s reading of 50.9. The CB consumer confidence for September also surprised at 104.1 – consensus was looking for 98.6 while August’s figure was at 101.1.

The S&P/CS Composite-20 house price index rose five percent in July, which was within expectations, but the Richmond manufacturing index in September disappointed at -8 as -2 was called for.

In other commodities, the Texas light sweet crude oil spot price fell to a one-week low of $44.19 per barrel, with the Brent crude oil spot price also dropping to a week’s low of $45.62 on Tuesday.

This followed Iran’s oil minister’s comments that a production cut agreement is unlikely to be reached in a meeting between OPEC and non-OPEC producers in Algiers, Algeria later on Wednesday.

The WTI crude oil spot price was last at $44.62, down 0.69 percent, and the Brent crude oil spot price was recently at $46.09, down 0.26 percent from the previous day’s close.

The spot gold price had inched lower during the US presidential debate between Donald Trump and Hillary Clinton on Tuesday.

The slight Clinton win saw speculative bids removed from the market – there had been some initial buying during the early Asian session under the assumption that a Trump victory in the first US presidential debate may materialise, MKS Group said on Wednesday morning.

Safe haven assets like gold and the Japanese yen were sold lower on Tuesday after Trump’s probability of becoming president was seemingly diminished after his poor showing in the debate, Angus Nicholson, a market analyst at Melbourne-based IG, said in a report on Wednesday morning.

“[Clinton’s] strong debate performance may well be enough to halt Trump’s recent momentum in the polls,” he said.

A number of safe haven assets had been bid up during the Trump poll surge as investors worried about what Trump would mean for the global economy, and particularly the global security risks he poses, Nicholson added.

In data, core durable goods orders, durable goods orders and crude oil inventories from the US are due later on Wednesday. Federal Reserve chairwoman Janet Yellen will also testify at the committee on financial services later today at Washington DC.

“Her views after the split FOMC [meeting in September] will be closely noted to see how close the Fed is to raising rates in December,” National Australia Bank said on Wednesday morning.

The Fed Fund futures market has assigned only an eight percent probability of a November rate hike, and 47.6 percent changes of a December rate rise, according to the CME Group FedWatch tool. The majority sees the Fed only taking action in February next year.

In equities, the Shanghai Composite fell 0.2 percent to 2,992.27 so far on Wednesday.

In other precious metals, silver was last at $19.055/19.085, down $0.095. Platinum rose $4.50 to $1,022/1,029, and palladium increased $4 to $697/705 recently on Wednesday.

On the Shanghai Futures Exchange, gold for December delivery was last unchanged at 285.60 yuan per gram, and the December silver was flat at 4,254 yuan per kilogram.

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