Gold edged up as Fitch Ratings’ move to strip the US of its top-tier sovereign credit grade triggered risk-off sentiment, sending global stocks falling. Both European stocks and US equities futures declined on Wednesday, giving the precious metal a boost after its 1.1 percent drop on Tuesday.
The dollar also inched higher, underscoring the greenback and the bullion’s status as safe haven assets.
Gold has been consolidating around $1,950 an ounce in recent weeks as investors wait for more clarity on the outlook for monetary policy. While swaps traders are paring bets on a quarter-point hike in September, views on the rate trajectory beyond then remain divided.
Meanwhile, figures released Tuesday suggested some softening in demand for American workers, potentially taking pressure off the Federal Reserve to keep hiking rates. Looser monetary policy tends to benefit bullion, which bears no interest.
On Wednesday, traders will be preparing for the release of ADP Employment Change figures, predicted to provide further evidence for a cooling US job market. That would add to mounting optimism that borrowing costs are near their peak.
Spot gold rose 0.3 percent to $1,951.06 an ounce as of 9:17 am in London. The Bloomberg Dollar Spot Index edged higher after gaining 0.5 percent on Tuesday. Silver was flat, while platinum and palladium fell.
(Edited by : Anshul)
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