LONDON: Gold firmed on Friday, edging further above the previous day's six-week low as the dollar steadied off a 10-month peak, but moves were muted ahead of key US payrolls data which could prompt a further wave of selling. The payrolls numbers follow a raft of upbeat reports on the US economy, including signs of an improving job market.
Data showing the biggest rise in labour costs in 5-1/2 years in the second quarter helped knock gold 1 percent lower on Thursday.
Spot gold was up 0.2 percent at $1,284.50 an ounce at 1202 GMT, off Thursday's low of $1,280.76, while US gold futures for December delivery were up $2.50 an ounce at $1,285.30.
Analysts have said the Federal Reserve may take a more hawkish stance on raising interest rates at its September policy meeting in light of the recovering US economy.
"Another gain in employment will really focus the mind on the Fed's response," Mitsubishi analyst Jonathan Butler said.
"We heard earlier this week that they are maintaining their accommodative monetary policy for some time after their quantitative easing programme comes to an end. But clearly investors are already starting to move on, and gold is having a hard time."
The closely watched July payrolls report is expected to show 233,000 jobs were added to the US economy last month, the sixth month in which employment has expanded by more than 200,000, a stretch last seen in 1997.
A strong reading has the potential to reignite a rally in the dollar index, which in July posted its biggest monthly gain since February last year.
"Gold and the US dollar have a strong historical negative correlation, as bullion is most frequently priced in dollar terms," HSBC said in a note.
"Expectations for a stronger dollar may keep a lid on gold prices in the near to medium term."
Comments
Comments are closed.