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Gold prices steadied at a one-month high on Friday, ahead of a much awaited US jobs data, as a retreat in Treasury yields and growing recession fears boosted safe-haven demand and kept bullion on track for its third straight weekly rise.
Spot gold was flat at $1,790.73/oz at 3.01am GMT, after hitting its highest level since July 5. Prices are up 1.5% this week. US gold futures were steady at $1,807.40/oz.
“Gold continues to benefit from a combination of a weaker dollar that has been driven by falling US bond yields as markets continue to price in peak inflation and a recession,” Oanda senior analyst Jeffrey Halley said.
The yield on 10-year Treasury notes slipped, reducing the opportunity cost of holding non-interest bearing gold. The market’s focus is now on the monthly US non-farm payrolls report due at 12.30pm GMT on Friday that could offer more clarity on the Federal Reserve’s aggressive tightening plans to combat soaring inflation. Economists expect an increase of 250,000 jobs in July.
“A soft payroll number will support gold’s upward momentum as it is likely to result in another bout of dollar weakness as yields fall. Gold should continue grinding towards the $1,900.00 region in the coming sessions,” Halley added.
The Bank of England raised interest rates by the most since 1995 in an attempt to smother surging inflation. The dollar rose 0.2% against its rivals, making gold less appealing for other currency holders.
Sino-US tensions remained in focus after China fired multiple missiles near Taiwan on Thursday, a day after US House of Representatives speaker Nancy Pelosi made a trip to the self-ruled island.
Spot silver rose 0.5% to $20.25/oz, and palladium climbed 0.8% to $2,081.43. Platinum gained 0.8% to $933.91/oz and was heading for its third consecutive weekly rise.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.