Investing.com - Gold prices fell in Asia below a key support level as expectations for a Fed rate hike next week appear on track, though U.S. jobs data later in the day is key and locally the focus is on the Korean Peninsula as the fate of the president of South Korea is on the line against a background of scandal with top chaebol Samsung (KS:005930) Group and tension with North Korea.
Gold for April delivery on the Comex division of the New York Mercantile Exchange fell 0.15% to trade at $1,198.20 a troy ounce, dropping below the key $1,200 level. Elsewhere, silver futures dropped 0.27% to $16.90 a troy ounce while copper traded lower at $2.658.
Attention in the Asian region will be riveted on eight justices of the Constitutional Court in South Korea who will deliver a verdict on whether the impeachment of the President Park Geun-hye by the legislature will stand. The decision will be televised live with massive crowds expected to gather in Seoul.
Investors are also focused on softer than expected initial jobless claims data came a day ahead of a key nonfarm payrolls report for February due to be released on Friday, with a gain of 190,000 jobs expected and seen as key to cement widespread expectations of a Fed rate hike.
Overnight, gold prices slipped to a five-week low on Thursday, despite a slump in the dollar, as increasing expectations of a March Rate hike continued to soften demand for the yellow-metal.
Gold struggled to take advantage of a pull-back in the dollar, after initial jobless claims missed analysts’ forecasts while investors’ expectations of a March rate hike grew ahead of key non-farm payrolls report due to be released on Friday. U.S. Department of Labor said Thursday, initial jobless claims increased by 20,000 to 243,000 in the week ending March 4 from the previous week’s total of 223,000. Analysts expected jobless claims to rise by 12,000 to 235,000 last week.
The softer initial jobless claims data came a day ahead of Friday’s nonfarm payrolls for February, viewed as a critical barometer of the U.S. economy and represents the final key economic data point ahead of the Federal Reserve’s policy meeting on March 14-15.
According to Investing.com’s Fed rate monitor tool, 90% of traders expect a rate hike in March, compared to just 80% of traders on Monday.
Gold is sensitive to moves in U.S. interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.