Gold set for best week in 10 months

Gold was heading for its biggest weekly gain in nine months on Friday as a modest bounce in oil prices boosted demand for the metal as an inflation-hedge, but investors were nervous ahead of a key US  jobs report that could trigger sharp moves.

The US nonfarm payrolls report is keenly watched as a gauge of economic strength and for its impact on the dollar and the Federal Reserve’s monetary policy.

BitcoinA strong report could prompt the Fed to raise rates soon and boost the dollar. Investors fear higher rates could dull the appeal of gold, a non-interest-bearing asset.

The report is expected to show that employers added 230,000 new jobs last month, and the unemployment rate remaining unchanged at 5.8 per cent, according to a Reuters poll.

“Should tonight’s numbers exceed 230,000 it could send gold tumbling quickly,” said Howie Lee, analyst at Phillip Futures, adding that support could come in at $1,140.

“(A strong report) should set the tone for gold to languish below $1,200 for the rest of the year and leave gold to end the year in red territory.” Spot gold slipped 0.2 per cent to $1,202.60 an ounce by 0354 GMT. The metal was set for a 3-per cent gain for the week its biggest jump since March.

In recent months, strong U.S. data and a robust dollar had pushed gold close to four-and-a-half-year lows. The slump in oil prices to five-year lows has also added pressure.

Gold traders were also tracking developments regarding stimulus measures in Europe.

On Thursday, the European Central Bank put off until next year a decision on whether to increase its stimulus, a delay that indicated rates will not be pressured lower for the time being.

-Reuters through FE


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