Gold ekes out gains as investors brace for U.S. jobs verdict

Gold investors already pricing in tapering - analyst

  
An employee of Deutsche Bundesbank tests a gold bar with an ultrasonic appliance during a news conference in Frankfurt January 16, 2013. Image used for illustrative purpose

An employee of Deutsche Bundesbank tests a gold bar with an ultrasonic appliance during a news conference in Frankfurt January 16, 2013. Image used for illustrative purpose

REUTERS/Lisi Niesner/File Photo

Gold prices edged higher on Friday as the dollar eased slightly, while investors focused on the U.S. labour market data due later in the day, considered key to the Federal Reserve's schedule for tapering monetary stimulus.

Spot gold rose 0.4% to $1,762.49 per ounce by 1124 GMT, while U.S. gold futures were up 0.2% at $1,762.60.

The dollar eased, buoying gold's appeal for those holding other currencies.

Gold also seemed to have found some support on comments from an advisor that a default on China Evergrande's offshore bond obligations was "imminent".

"Gold is trading in narrow ranges and bargain hunting is appearing on dips towards $1,750, but there's little inclination to take aggressive positions, especially with non-farm payrolls report on the horizon," StoneX analyst Rhona O'Connell said.

Fed Chair Jerome Powell said it would take one more "decent" jobs report to set the process in motion for a reduction in U.S. central bank's $120 billion in monthly bond purchases.

If data overshoots to the upside, gold could face a knee-jerk downward reaction as bond yields would probably rise, but "a miss would be supportive for gold as the word 'stagflation' is increasingly appearing on the radar and gold benefits from risk-aversion", O'Connell added.

A Reuters survey predicted non-farm payrolls likely rose by 500,000 jobs in September. 

However, some analysts see gold's outlook tilted to the downside, as the Fed may eventually hike interest rates regardless.

Reduced stimulus and higher interest rates lift bond yields, translating into increased opportunity costs of holding bullion, which pays no interest.

While safe-haven gold will find some support from elevated inflation, geopolitical tensions and rising Delta coronavirus cases, factors including Fed tapering, easing pandemic restrictions and strong growth will cap prices, Fitch Solutions said in a note dated Oct. 7.

Spot silver fell 0.1% to $22.57 per ounce.

Platinum rose 2.6% to $1,004.81, and palladium gained 4% to $2,038.12.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Kevin Liffey) ((Arundhati.Sarkar@thomsonreuters.com; twitter.com/Arundhati_05; +1 646 223 8780 Ext: 2776))


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