Gold hits 5-month peak as US jobs data tempers rate hike views

BENGALURU: Gold hit a five-month peak on Friday as the dollar slid following weaker-than-expected US jobs data, which added to expectations the US Federal Reserve may go slow on interest rate hikes next year.

Spot gold gained 0.7 percent to $1,245.74 per ounce at 11:45 am EST (1645 GMT), having hit $1,246.72 per ounce earlier, its highest since July 13.

With a rise of nearly 2 percent this week, gold looked set to post its best gain since the week of March 23.

US gold futures were also 0.6 percent higher at $1,251.30 per ounce.

"The non-farm payroll data came out lower than expected. It is a negative pick that is causing people to hedge a little bit more in gold and any shorts are probably covering and adding few longs to the market," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.

The dollar eased against a basket of currencies on Friday after data showed US job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity.

"Soft employment report reinforces the narrative that we have perhaps seen the highs in employment... so I think a December hike is done but anything in 2019 is up in the air," said Tai Wong, head of metals trading at BMO.

Interest rate futures suggested traders see not more than one rate increase from the Fed next year, compared with previous expectations for possibly two rate hikes.

"With increased volatility and geopolitical risk, macro asset allocation is becoming more gold-positive again while we believe much of the dollar's upward move is now behind us with rate hike expectations dropping," analysts at BMO Capital Markets said in a note.

Gold, which is considered a safe investment during times of financial, economic and geopolitical uncertainty, has recovered about 7 percent from 19-month lows hit in mid-August.

"At this point it looks like the price of gold has a strong foundation at these levels and should remain in a bullish mode the rest of the year," Walter Pehowich, executive vice president of investment services at Dillon Gage Metals wrote in a note.

Meanwhile, spot palladium rose 1.2 percent to $1,223.50 per ounce and was set to post its second straight weekly gain.

The autocatalyst metal, however, drifted further away from an all-time high of $1,263.56 hit this week.

Silver gained 0.7 percent to $14.57 per ounce and was headed for a weekly rise of more than 2 percent.

Platinum rose 0.2 percent to $788.50. The metal earlier hit a three-month low of $779 and extended losses for a fifth successive week.