The price of gold slipped back towards two-month lows after upbeat US jobs data added to speculation that the Federal Reserve is getting ready to hike interest rates.
Payroll processing firm ADP said that non-farm private employment rose by 177,000 in August, beating expectations of an increase of 175,000.
Some traders think a rise could come as soon as next month, and it may not be limited to just one.
Fed vice chair Stanley Fischer backed-up his dovish comments last week by telling Bloomberg that he doesn’t expect a “one and done” approach to a hike.
The Fed has suggested all summer that, should US economic data continue to demonstrate progress, it would seriously consider upping rates.
A rate rise would likely have an adverse effect on gold as it increases the opportunity cost of holding non-yielding assets such as bullion.
The US dollar index – which measures the greenback against a basket of other currencies – made some gains on Wednesday, too, following Fischer’s comments.
A stronger dollar is generally an indication that gold might struggle as it makes the metal more expensive to foreign currencies.
Although there has been a lot of focus on the negative impact a rate hike could have on precious metals, it’s worth remembering that this year’s rally came about not long after the Fed upped rates, so a downturn in the gold price isn’t necessarily a given.
Analysts at Commerzbank are still targeting a long-term gold price of around the US$1,450 mark.
Could your old mobile be a gold mine?
According to researchers at the University of Edinburgh, the answer to the question above is yes.
Scientists have developed a new technique for recovering precious metals, such as gold, without the need for toxic chemicals.
It’s estimated that as much as 7% of the world’s gold is contained within electrical waste, and the team believe their method could help to salvage some of the 300 tonnes of gold used in electronics every year.
Existing methods of extracting gold from circuit boards are inefficient and potentially hazardous given that the process involves harmful chemicals such as cyanide.
The team say they have been able to develop a compound that can be used to recover gold more effectively.
“We are very excited about this discovery, especially as we have shown that our fundamental chemical studies on the recovery of valuable metals from electronic waste could have potential economic and societal benefits,” said Professor Jason Love, from the university’s school of chemistry.
At UK market close, gold was down US$2 to US$1,309, platinum was down US$3 to US$1,050, while silver bucked the trend and gained 8c to trade at US$18.67.