Gold dips in Asia as dollar gains weigh on sentiment
Investing.com - Gold prices fell in early Asia on Monday with attention on the dollar after gains last week on renewed views the Fed may hike for a third time this year.
Gold for August delivery fell 0.16% to $1,262.52 on the Comex division of the New York Mercantile Exchange.
Ahead in the week, Friday’s U.S. inflation figures are seen as key as are comments by Fed speakers on interest rate and balance sheet unwinding views.
Last week, gold prices fell on Friday as a solid U.S. employment report for July revived expectations for another interest rate increase by the Federal Reserve this year.
In Asia, The AIG Construction index rose to 60.5 in July from 56.0 in June, a major boost. Japan reported its foreign reserves data for July with figures standing at $1.260 trillion from $1.260 trillion in June.
The Labor Department reported Friday that the U.S. economy added 209,000 jobs last month, beating expectations for a gain of 183,000 and the unemployment rate ticked down to 4.3%.
The report also showed that average hourly earnings increased by 9 cents or 0.3% last month to $26.36 an hour, the largest monthly increase since October.
Wages increased by 2.5% on a year-over-year basis, matching June’s increase.
The uptick in wage growth indicated that inflationary pressures are firming. Markets believe stronger inflation will enable the Fed to stick to its plans for a third interest rate hike this year.
Expectations of a faster pace of rate increases tend to weigh on gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Gold prices are up around 9% this year, lifted in part by expectations that the Fed will take a gradual path toward tightening monetary policy.
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