US average 30-year mortgage rate rises to 3.46 percent

Raisa Rickie waits in line to apply for a job with Aldi at a job fair in Miami Lakes Fla. On Friday Sept. 2 2016

Gold edged higher on Wednesday as the dollar softened, but remained on course to snap two months of gains in August on mounting speculation the Federal Reserve could raise interest rates sooner rather than later.

Gold fell to a two-month low on Wednesday afternoon in London after better-than-expected USA jobs data raised speculation that the Federal Reserve would move forward with interest-rate rises.

At a speech in Jackson Hole, Wyo., on Friday, Federal Reserve Chair Janet Yellen said the "case for a rate hike has strengthened in recent months".

Focus is now on Friday's U.S. August non-farm payrolls report, which should indicate whether the U.S. economy is robust enough to withstand monetary tightening.

Still, Deutsche Bank Chief U.S. Economist Joseph LaVorgna said the Fed remains a hostage to markets and will not hike at its September 20-21 meeting. Early Wall Street trading was set to be dominated by Apple after European Union antitrust regulators ordered it to pay up to 13 billion euros ($14.5 billion) in taxes plus interest to the Irish government after ruling a special scheme to route profits through Ireland amounted to illegal state aid.

The yield on Italy's 10-year BTP bond recovered after an early wobble as it sold 7.75 billion euros of debt at a record low cost despite uncertainty surrounding a referendum later in the year that Prime Minister Matteo Renzi has pinned his future on.

Brexit bruises were also beginning to show. They fell 1.27 percent to 943.23 tonnes on Wednesday and were down 1.6 percent for the month.

"Looking ahead, the service sector faces a challenging environment in which to grow and invest, with uncertainty about demand weighing on firms' minds", said the CBI's head of economic analysis and surveys, Anna Leach. Despite the view of some economists that the Fed is following the market's lead, it would be relatively simple for the central bank to flip that dynamic, he added.

Spot gold may retest support at $1,306, with a good chance of breaking below this level and falling more to the next support at $1,301, according to Reuters technical analyst Wang Tao.

"The dollar and Treasury yields had risen in tandem following Jackson Hole last week but that phase came to an end yesterday". It was last at $1,308.05/1,308.45, down $3.75 on the previous close.

The single currency is forecast to slip to around US$1.10 in a month, to US$1.09 in three and then further to US$1.08 in a year.

In emerging markets, Brazil was in the spotlight. She now leads in almost all opinion polls. South Korea's Kospi fell 0.3 percent to 2,032.35.