Gold defies higher probability of a Fed rate hike in September

Gold is trading at just under $1,100 a troy ounce, or roughly €1,000 a troy ounce. It has thus managed to defy the sound US labour-market figures, which make a Fed rate hike in September more likely. In euros, the price actually hit a two-and-a-half-week high of €1,010 briefly after the US dollar made strong temporary gains, but wasn't actually able to hang on to the new figure. 

US employment continued to rise strongly in July, which in our view will encourage the Fed to raise interest rates before the end of the year. Our economists still envisage a first move at the Fed's next meeting in September. The probability of this occurring that is factored in by the market rose to over 50% in the wake of the strong data. 

"Once the uncertainty about the Fed's course starts to fade, the price of gold should rise. There are signs of the Greek debt crisis easing a little, though. Greece's creditors have agreed on a draft memorandum of understanding for the third bailout package, and the Greek parliament is already to vote on the issue at the end of the week", says Commerzbank. 

In the week to 4 August, speculative financial investors cut their net short positions in gold to 11,300 contracts, but this didn't help prices. Net short silver positions were likewise scaled down moderately, but here too there was no positive impact on prices.