Gold Fund Holdings Rebound From Biggest Two-Day Drop This Year

  • Prices hold gains made Friday, when jobs data missed estimates
  • Trading should be thin today due to U.S. holiday: Marex

Gold steadied as holdings in bullion-backed funds rebounded from the largest two-day drop this year.

Investors bought 0.6 metric ton of the metal through exchange-traded funds as of Friday, when prices rose as weaker-than-expected U.S. jobs data cut expectations that the Federal Reserve will raise interest rates this month. They sold 16.1 tons in the two days before that, the most since December.

Gold had surged as much as 30 percent this year as the Fed refrained from further tightening and the U.K.’s Brexit vote boosted demand for a haven. The metal’s rally then lost momentum from mid-July as improving data bolstered expectations that U.S. policy makers may soon raise borrowing costs. Prices closed at the highest since Aug. 23 on Friday after data showed American hiring moderated more than forecast in August, while a Thursday report showed manufacturing unexpectedly contracted.

“The market is still range bound and very much beholden unto the Fed and the dollar,” David Govett, head of precious metals trading at Marex Spectron, said in an e-mailed note. “I think we have seen the lows for the time being now.”

Gold for immediate delivery rose 0.1 percent to $1,326.91 an ounce at 1:59 p.m. in New York, according to Bloomberg generic pricing. The metal should trade between $1,310 and $1,350 for the “foreseeable future,” Govett said, adding that trading should be thin today because of a U.S. holiday.

ETF Holdings

Investors now own 2,017.2 tons of gold through ETFs and holdings are 1.1 percent below a three-year high set Aug. 11.

Low borrowing costs add to the appeal of owing gold, which doesn’t return a yield. Odds of the Fed raising rates this month have slid to 34 percent from 42 percent on Aug. 26, according to Fed funds futures tracked by Bloomberg. Traders see a 61 percent chance of a move by December.

In other precious metals news:

  • Silver added 0.4 percent to $19.52 an ounce.
  • Platinum gained 0.8 percent and palladium was little changed.

— With assistance by Eddie Van Der Walt, and Ranjeetha Pakiam

    Before it's here, it's on the Bloomberg Terminal.