Gold steady as September Fed rate hike views cool; equities rise

Gold held steady early on Tuesday from the prior session as the dollar weakened on expectations that the US Federal Reserve will not raise rates in September, but the yellow metal's gains were limited by stronger equity markets.

Spot gold was slightly up at $1,327.46 per ounce by 0409 GMT. The metal rose 0.1 per cent on Monday.

US gold futures were up 0.4 per cent at $1,331.40.

The fact that gold did not move much despite disappointing US non farm payroll numbers reflects the extensive level of speculative position in the gold markets either through futures or exchange traded funds, said Dominic Schnider of UBS Wealth Management in Hong Kong.

"The idea that the Fed is going to move, if not in September but in October, is limiting people from buying gold," he said, adding that prices could drop below $1,300 in the short term, with a good resistance level of $1,275.

Money managers held a net-long position of 231,594 US gold futures contracts in the week to August 30, the Commodity Futures Trading Commission said on Friday. That's up from 40,597 contracts a year ago.

The US Labour Day holiday kept volumes subdued on Monday. New US data releases and any speeches from Fed officials will be watched closely for clues to the timing of any rate hikes.

Gold could run into upside headwinds as the US jobs number was not excessively weak and recent Fed official's comments have been hawkish, HSBC analyst James Steel said in a note.

However, if oil prices can gain upward traction on an agreement between top producers Saudi Arabia and Russia to cooperate in world oil markets, gold may be a beneficiary, Steel said.

Crude prices extended gains on Tuesday, buoyed after top producers Russia and Saudi Arabia agreed to cooperate on stabilising the oil market. 

Asian shares edged up on Tuesday, while the dollar index, which measures the greenback against a basket of six major currencies, slipped 0.1 per cent to 95.732.

Spot gold may retrace to a support at $1,315 per ounce, as it failed to break a resistance at $1,330 again, according to Reuters technical analyst Wang Tao.

South Africa's biggest platinum mine-workers' union and the industry have failed to reach a deal on workers' pay, the union said on Monday, raising the prospect of industrial action in the world's top producer of the white metal.

Spot silver touched an over 2-week high of $19.57 an ounce.

Platinum was up 0.2 per cent at $1,071.20 an ounce. It hit a one-week high of $1,077 earlier in the session. Palladium rose 0.6 per cent to $682.20. It earlier touched a near one-week high of $684.90.