By Jan Harvey
LONDON — Gold slid to a two-month low on Wednesday after forecast-beating US jobs data stoked speculation that the Federal Reserve would move ahead with plans to raise interest rates, propelling the dollar index to its highest in three weeks.
The dollar rose after a report by a payrolls processor showed US private employers added 177,000 jobs in August, above economists’ forecasts. That supported expectations for Friday’s closely watched US payrolls report to be strong. An upbeat payrolls report would support the view that further US rate hikes may be on the cards, after Fed officials sounded a hawkish note at a meeting last weekend.
Spot gold fell to its lowest since June 24 at $1,304.91 an ounce and was $1,309.60 an ounce at 2.00pm GMT, down 0.1%. The metal is heading for a 2.8% drop in August. US gold futures were down $4.10 at $1,312.40.
Technical selling, US dollar strength and rate hike speculation have been behind gold’s weakness on Wednesday, Commerzbank analyst Carsten Fritsch said, adding that gold is now closing in on support at the psychologically key $1,300 level.
"The last time gold traded below $1,300 an ounce was on the day after the Brexit referendum," he said. The precious metal surged 5% in a single day after Britain voted to leave the European Union in late June, subsequently hitting more than two-year highs. It has now surrendered the bulk of those gains.