The spot gold price inched higher during Asian trading hours on Thursday supported by positive sentiment among commodities after crude oil prices jumped early morning.
Spot gold was last at $1,324.60-1,325.00 per ounce, up $2.60 from Wednesday’s close. Trading ranged at $1,322.30-1,325.88 so far.
Crude oil prices surged to three-week highs during early morning Thursday in Asian time zones following reports that OPEC members have reached an initial deal to cut oil output – the Brent crude oil spot price reached $49.07 per barrel and the Texas light sweet crude touched $47.41.
OPEC has agreed on Wednesday to reduce its oil production to 32.5 million barrels per day from the current production of 33.24 million barrels per day, Reuters reported. The deal is expected to be formalised in November.
The Brent was last at $48.59, down 0.56 percent, while the WTI was recently at $47.07, down 0.08 percent on Thursday.
Strong support for gold continues to lie around the 100-DMA of $1,310 with initial resistance around $1,330, MKS Group said Thursday morning.
With China’s upcoming week-long national day holidays, the metal will likely continue to consolidate between $1,300-1,350 barring any unexpected market moving news, the broker said.
Overnight, Federal Reserve chairwoman Janet Yellen’s remarks on monetary policy outlook during her testimony at the Committee on Financial Services in Washington DC were in line with the Federal Open Market Committee’s message in September.
The US jobless rate is close to inferring full employment and should fall further, though productivity and overall growth has been disappointing and inflation lacked upward pressure, she said.
While the Feds have not given a fixed timetable to raise rates, a majority of FOMC members see a rate rise this year, ANZ Research said on Thursday morning.
“The market will not move to seriously price that possibility in until the US election [on November 8] is out of the way,” the bank said.
“But even then, they’ll keep a wary eye on the data and event calendar – throughout 2016 mixed data and wobbly markets have conspired to keep the Fed on hold despite repeated assertions that their fingers remain on the trigger, so it would not be unreasonable to conclude that this pattern may well continue.”
In US data released Wednesday, core durable goods orders fell 0.4 percent month-on-month in August, close to forecast of a 0.5-percent drop. Growth for durable goods orders were flat month-on-month in August but better than consensus of a 1-percent decline.
US weekly crude oil inventories fell 1.9 million barrels last week, against expectations of a 2.4-million-barrel rise.
US data due later today includes second quarter final GDP, unemployment claims, final GDP price index, goods trade balance and pending home sales.
In currencies, the US dollar index rose 0.03 percent to 95.44 so far on Thursday.
In equities, the Shanghai Composite rose 0.52 percent to 3,003.53 recently on Thursday.
In other precious metals, silver was last at $19.245/19.27, up $0.052. Platinum rose $10.50 to $1,033/1,040, and palladium increased $9.50 to $714/723 recently on Thursday.
Silver is expected to perform well in September and October because the macro environment for precious metals may remain supportive thanks to a dovish Fed, Boris Mikanikrezai, a metals analyst at FastMarkets, said.
“But we do not think silver’s rally will be sustainable in the fourth quarter because we think the US economy will continue to perform well, so extreme bullishness among speculators and investors may reverse once the Fed starts preparing the markets for a possible rate increase in December.”
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 4,293 yuan per kilogram.
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Source: Bullion Desk News
