Gold prices held steady in a narrow range on Friday ahead of a monthly US employment report that should yield further clues on the pace of monetary tightening.
Spot gold edged up 0.2 per cent to $1,202.16 an ounce at 1033 It had gained 0.9 per cent so far for the week, on track to mark its biggest weekly gain in six. US gold futures were up 0.4 per cent at $1,205.70 an ounce.
Despite the weekly gain, gold prices have fallen more than 12 per cent from a peak in April largely due to strength in the dollar, which has benefited from a vibrant US economy, rising US interest rates and fears of a global trade war.
‘The fear is that the rising dollar is going to cause a huge rout in the emerging markets and investors want to hedge that risk,’ Think Markets UK chief markets analyst Naeem Aslam said.
A Reuters survey showed economists on average expect non-farm payrolls to have risen by 185,000 in September after a jump of 201,000 in August.
Meanwhile, world markets steadied, as a four-year high in oil prices and the biggest weekly jump in Treasury yields since February left investors wondering where to go next.
The usual drop in activity ahead of payrolls couldn’t prevent Europe’s main bourses following Asia into the red - but it wasn’t the deep shade of crimson of the previous day.
Investors are expected to scrutinise the jobs data for signs of wage inflation.
Higher US interest rates draw investors to the dollar, boosting its value and making assets priced in the US unit, such as gold, more expensive for holders of other currencies.
Rising US government bond yields typically weigh on precious metals, as they make Treasuries attractive to investors seeking assets that earn a return as opposed to gold, which earns nothing and costs money to store and insure.
‘We expect that a topping out of US real yields will begin to put a floor under gold prices starting in 2019,’ said Sabrin Chowdhury, commodities analyst at Fitch Solutions.
‘Upward pressure on real yields will fade in the second half of 2019 and into 2020 due to slowing US economic growth and rising inflation.’
Among other precious metals, spot silver rose 0.5 per cent to $14.63. Palladium was steady at $1,057.80, while platinum rose 0.2 per cent to $823.49.
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