February 2, 2018 / 10:47 AM / 10 months ago

PRECIOUS-Gold edges lower as dollar firms ahead of U.S. jobs data

    * U.S. nonfarm payrolls data due 1330 GMT
    * Palladium on track for biggest weekly drop since Sept
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Updates throughout, adds LONDON dateline)
    By Jan Harvey
    LONDON, Feb 2 (Reuters) - Gold edged lower on Friday as the
dollar ticked up against the euro ahead of hotly anticipated
U.S. non-farm payrolls data later, which will be closely watched
for clues on the outlook for U.S. interest rates.
    The dollar rose 0.2 percent against the single currency in
early trade, though it remained on track for a seventh straight
weekly loss. Its early signs of strength pressured gold, which
is priced in the U.S. unit.       
    Spot gold        was down 0.3 percent at $1,345.22 an ounce
at 1030 GMT, while U.S. gold futures        for June delivery
were flat at $1,353.10 an ounce.
    The payrolls data due at 1330 GMT is expected to show that
the United States added 180,000 jobs in January, an increase
from 148,000 the month before. 
    Stronger than expected numbers could shore up expectations
for the Federal Reserve to press ahead with interest rates hikes
this year, increasing the opportunity cost of holding
non-yielding bullion.
    "If we have any news that makes it more (likely) that we
have more and faster rate hikes in the United States, of course
it will be negative for the price," Frank Schallenberger, head
of commodities research at LBBW, said.  
    "If we have very strong data from the U.S. and signs that
the economy is even stronger than everyone thinks, it will be
bad for gold in the short term, but what counts is the long
term. I think fundamentals are very strong at the moment, and
$1,350 is not the end."
    The Fed held interest rates unchanged after its latest
policy meeting this week but raised its inflation outlook and
flagged "further gradual" rate increases.             
    Gold is set to end this week little changed, after rising in
six out of the last seven weeks and hitting its highest in 17
months last week at $1,366.07. 
    On the wider markets, world stocks were set to post their
biggest weekly drop since late 2016 as talk of central bank
policy tightening and expectations of higher inflation boosted
borrowing costs globally.            
    Holding gold offers a degree of insurance if the broader
market suffers a correction, ScotiaMocatta said in a monthly
report this week. "Record-setting global equities may well start
to wobble if inflation starts to pick up, or if bond
yields/interest rates continue to rise," it said. 
    Silver        was 0.7 percent lower at $17.11 an ounce,
while platinum        was down 1.4 percent at $991.60 and
palladium        was up 0.6 percent at $1,042.72. 
    After hitting record highs this month, palladium fell to its
lowest since Dec. 18 at $1,013.72 on Thursday and is on track
for its biggest weekly drop since early September, down 4.8
percent. 

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Alison Williams)
  
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