March 9, 2018 / 11:13 AM / 3 months ago

PRECIOUS-Gold off lows as dollar slips on slowing U.S. wage gains

    * Gold bounces off lows
    * U.S. non-farm payrolls post largest gain in 1-1/2 years
    * Slower wage growth weakens U.S. dollar

 (Recasts, updates prices; adds comment, NEW YORK to dateline)
    By Renita D. Young and Eric Onstad
    NEW YORK/LONDON, March 9 (Reuters) - Gold prices bounced off
their lows on Friday after the U.S. dollar slipped against most
of its peers as slowing wage gains foreshadowed a gradual
inflation increase this year.
    U.S. jobs growth posted its biggest increase in February in
more than 1-1/2 years. Although the data increased the
likelihood of interest rate rises, slower wage gains pointed to
only a gradual increase in inflation.             
    The U.S. dollar index was down slightly against a basket of
currencies, making dollar-priced gold less expensive for
purchasers with other currencies.                            
    "Gold is (also) seeing some pent-up buying. Gold was showing
over-sold conditions on the chart. I think the market was
pricing in good news of better-than-expected jobs numbers," said
Bob Haberkorn, senior market strategist at RJO Futures in
Chicago.
    Spot gold        was unchanged on the day at $1,321.99 by
1:46 p.m. EST (1846 GMT) and on track to end the week unchanged.
U.S. gold futures         for April delivery settled up $2.30,
or 0.2 percent, at $1,324 per ounce.
    "The strong headline payrolls numbers suggest the Fed may do
a little more. I think there’s certainly no risk they’re going
to do less than three (rate increases)," said Steven Ricchiuto,
chief economist at Mizuho Securities USA in New York. 
    Gold is highly sensitive to rising U.S. interest rates,
because they make bullion less attractive since it does not pay
interest.
    Slow wage growth, however, could temper expectations that
the Fed will raise its rate forecast to four hikes this year
from three. There is optimism that tightening labor market
conditions will spur faster wage growth and pull inflation
toward the Fed's 2 percent target.             
    News that U.S. President Donald Trump agreed to meet North
Korea's Kim Jong Un in what would be the first face-to-face
encounter between the countries' leaders somewhat pressured
gold.            
    "If, with this news, the tension with North Korea is easing,
it's something that is, maybe not headwinds, but a mild breeze
against gold," said Norbert Rucker, head of commodity research
at Julius Baer in Zurich.  
    The reaction has been muted because gold had failed to show
strong safe-haven demand last year during months of insults
exchanged over the North's nuclear and missile programs, he
noted. 
    Silver       , meanwhile, increased 0.6 percent at $16.60 an
ounce, poised for a 0.6 percent weekly increase. Platinum       
gained 1 percent at $961.40 per ounce, ending the week down 0.4
percent. Palladium        was up 1.6 percent at $992 per ounce,
but unchanged from the prior week.

 (Additional reporting by Eileen Soreng in Bengaluru
Editing by Elaine Hardcastle and Dan Grebler)
  
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