Gold treads water on rate hike views; falling stocks support
Gold was little changed on Monday as a fall in stock markets helped to win it safe-haven support against the view that the US Federal Reserve will raise rates as early as this month following upbeat comments by central bank officials last week.
Spot gold held steady at $1,328.06 an ounce at 0425 GMT. US gold futures edged 0.1 percent lower at $1,328.30 an ounce.
A chorus of hawkish comments from Fed officials kept hopes alive for a September rate hike despite a recent spate of disappointing economic data, including only a modest rise in US nonfarm payrolls.
"A pick up in focus on the Fed speakers certainly means that every word will be closely analysed. It is going to create a little bit of volatility going forward," ANZ analyst Daniel Hynes said.
"Expectations are increasing about a potential hike in rates this September. That alone will see investors reduce their long positions over the coming days."
After Boston Federal Reserve President Eric Rosengren spoke on Friday, odds on a rate hike in September rose to 30 percent probability from 24 percent before his comments.
Asian shares skidded on Monday with investors rattled by rising bond yields and the talk the Fed might be serious about lifting US interest rates as early as next week.
"We expect gold to continue to be under modest pressure, especially if expectations about a September Fed rate move continue to become more firmly entrenched," INTL FCStone analyst Edward Meir said in a note.
Declines in equities could offer a measure of support and keep heavier selling from materializing, Meir said.
Fed governor Lael Brainard is scheduled to give a talk in Chicago later on Monday, one day before the central bank's communications blackout period takes effect.
A hawkish speech would likely put bullion under distinct selling pressure, HSBC analyst James Steel said.
"However, if rate concerns really rattle the financial markets, more profound equity market declines could set off renewed 'safe-haven' purchases," Steel said.
Hedge funds and money managers hiked their net long position in COMEX gold contracts to a nine-week high in the week to Sept. 6, and they also raised a bullish stance in silver, US Commodity Futures Trading Commission data showed on Friday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.12 percent to 939.94 tonnes on Friday.
Spot silver shed 0.6 percent to $18.92. The metal touched its lowest since Sept. 2 at $18.75 per ounce.
Platinum fell 0.8 percent to $1,049.50 an ounce and Palladium was down 0.5 percent at $671.