Gold surges in anticipation of US economic data

Gold prices rose to a three-week high at settlement today, Aug. 29, following the release of US economic data that indicated a slowdown in the labor market and a decline in consumer confidence.

Bullion for December delivery nudged up by 0.95%, or $18.30, to finish at $1,965.10 an ounce — the highest level since Aug. 7.

Data released today by the US Labor Department showed that US job openings shed 338 positions to reach 8.82 million jobs in July — the lowest level in nearly 28 months, indicating that the US labor market was hurt by the Federal Reserve’s monetary tightening cycle.

Elsewhere, the Conference Board's US consumer confidence index plummeted to 106.1 in August, from a downwardly revised July reading of 114.0, according to a recent report.

The Conference Board expectations index, based on consumers’ short-term outlook for income, business, and labor market conditions, plunged to 80.2 this month, reversing July’s sharp uptick to 88.0. The report showed that forecasts were just above 80 — the level that historically signals a recession within the next year.

The downbeat US labor market and consumer confidence reports suggest the Fed may not lift rates as much as previously anticipated. This, in turn, would bolster safe-haven demand for gold in the near term, Jim Wyckoff, senior market analyst at Kitco, told CNBC.

Chances that the Fed will keep interest rates unchanged at the September meeting increased to 86%, from 78% in the previous reading, according to the CME FedWatch Tool.

Looking forward, markets are awaiting the release of the US Personal Spending Price Index data on Aug. 31, prior to issuance of the non-farm payrolls report the day after.