Gold rises but on track for third weekly fall

Bengaluru — Gold prices crawled higher on Friday ahead of a key US labour report, but the metal faces a third consecutive weekly loss on bets that the US Federal Reserve will retain its aggressive rate-hike stance.

Spot gold rose 0.2% to $1,699.40/oz by 3.49am GMT, but was down 2% for the week so far. US gold futures were up 0.1% at $1,710.50. The dollar index was slightly off a 20-year peak scaled in the previous session but was on track for a third straight weekly rise.

Weaker-than-expected data could offer a temporary respite from gold selling, said Stephen Innes, managing partner at SPI Asset Management. However, “the market is still really playing on a higher-for-longer US interest rate narrative”.

US non-farm payrolls data is due at 12.30pm GMT and is likely to show 300,000 jobs were added in August. Data on Thursday showed the number of Americans filing new claims for unemployment benefits fell to a two-month low last week, while layoffs dropped in August suggesting the central bank would need to continue aggressively raising rates.

While US manufacturing grew steadily last month, factory activity in China, the eurozone and Britain fell. Major central banks are expected to continue with aggressive monetary policy tightening to rein in sky-high inflation but is also fanning fears of an economic slowdown.

Even though gold is seen as a hedge against inflation and economic uncertainties, higher interest rates increase the opportunity cost of holding bullion.

Technical support is not evident until $1,675/oz and gold could easily get there given the current rate of decline and the generally bearish environment for the precious metal, Edward Meir, an analyst with ED&F Man Capital Markets said in a note.

Spot silver and platinum were flat at $17.84/oz and $828.00/oz, respectively. Palladium rose 1.1% to $2,035.69. They were also headed for a third consecutive weekly fall.

Reuters