Gold steadied on Thursday, hovering below Tuesday's seven-week high, as investors awaited U.S. jobs data for further clues on the outlook for interest rates. The dollar fell on reduced expectations for a third U.S. rate increase this year. An upbeat payroll report will drive the dollar up as the labor market appears to be in its best shape in many years and despite double-digit U.S. earnings growth in the second quarter. Reduced rate rise expectations on contained inflation tend to weaken the dollar. Weaker-than-expected U.S. services sector data worried investors and stoked doubts that the Federal Reserve would raise interest rates again in 2017.
Spot gold was 0.15 percent higher at $1,268.15 an ounce, not far from Tuesday's seven-week high of $1,273.97. In early Asian trade, it fell $6.20 within one minute to the session low of $1,258.20, suggesting a bearish tone in the month as market bulls are losing steam. But it is also possible that this was caused by position squaring on strong expectations over the non-farm payroll report.
In general, the non-farm payroll report due tonight will play a key role in gold’s movement this month. We expect a strong report, lifting the dollar and dampening bullion.
Silver rose 0.6 percent to $16.64 an ounce on Thursday, still lingering around the key support around $16.50. A expected upbeat U.S job report would drag the white metal below the level and trigger a round of decline in the medium term.

 
Dealing Room, ICBC Beijing Branch
Lv Yan

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