Despite a recent weakness in the US dollar, which is seen supportive for dollar-priced commodities, gold has failed to gain traction and remained confined in a broader trading range. Even though the uncertainty surrounding prospects of an eventual Fed rate-hike in 2016 has been weighing on the greenback, gold has failed to benefit from it as continuous slide in the Volatility Index, accompanied with the ongoing bullish momentum in the broader US equity index, has not been supportive for the safe-haven appeal of the previous metal.
US new home sales data was much stronger than expected with the annualized rate at an 8-year high of 654,000 for July from a revised 582,000 previously, maintaining the run of favorable housing-sector data. This is their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook. Despite this, and the latest Fed discount rate minutes recording 8 of the 12 regional Fed banks called for a discount rate increase in July from 6 at the previous meeting, the gold is seemingly not drastically affected.
“Markets are going to be quiet until Friday as everyone is waiting for some clues from Janet Yellen’s speech,” said Kent Li, deputy in charge for bullion desk, Wing Fung Precious Metals.
Amid conflicting signals from the Fed in recent days, central bankers from around the world would gather on August 25 for an annual meeting in the mountains of Jackson Hole, Wyoming, with Fed chair Janet Yellen due to speak the following day.
Spot gold was nearly flat at $1,338.20 an ounce at 0059 GMT and might revisit its August 22 low of $1,331.35 within the nest 24 hours, while US gold slipped 0.3% to $1,342.60 an ounce in the North American session. In Asian trading, prices for gold contracts for December delivery pulled back 0.29% and had dipped 0.38% in midmorning trading in Europe after earlier hitting a session low of $1,339.50.
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