Gold continued to trade narrowly below $1,200 on Friday morning ahead of the blockbuster US jobs report that is likely to determine the metal’s near-term direction.
The spot metal price was last at $1,193.80/1,194.60 per ounce, down $5.80 on Thursday’s close and trading in a tight $7 intraday range so far.
Downside pressure from a dollar – trading at a fresh 11-year high against the euro at 1.0985 – continues to weigh on the metal, with moves likely to be exacerbated should non-farm payrolls come in better than expected.
A reading of 240,000 is forecast after 257,000 in January, while the unemployment rate is seen dropping to 5.6 percent from 5.7 percent.
But the data may undershoot following two disappointing weekly unemployment claim figures in February and a forecast-missing ADP non-farm employment change number earlier this week. ANZ predicts a reading of 210,000, below the three-month average of 330,000 and the six-month average of 277,000.
“Slower hiring seems consistent with the softer recent tone of US domestic data, particularly in manufacturing and the oil and gas sectors. However, strength in other indicators like the JOLTs survey is suggestive of upside risks,” the bank said.
A negative reading would ultimately damage the dollar’s current surge and lift gold back above $1,200 in the near term – particularly after Fed chair Janet Yellen recently suggested that interest rates will stay near zero for at least two more meetings.
The yellow metal performed well in the previous session after a speech from ECB president Mario Draghi on the central bank’s bond-purchasing programme.
He set a floor for bond purchases at the ECB’s deposit rate of -0.2 percent, following questions regarding to the extent to which the central bank will dabble with negative-yielding bonds.
But it also revised its 2015 GDP growth projection higher to 1.5 percent from the 1.0-percent forecast it made in December. It also increased its 2016 estimate to 1.9 percent from 1.5 percent and now sees growth of 2.1 percent in 2017.
“Gold historically benefits from expectations for easier monetary policies and the focus on the ECB’s QE execution helped explain the early rally,” HSBC’s James Steel said.
In data today, German industrial production was broadly in line with expectations at 0.6 percent, although the French trade balance fell short at -0.3 percent. Still to come today are the revised eurozone GDP and the US jobs report.
Other metals were performing similarly – silver was last 19 cents lower at $15.98/16.03 per ounce and platinum was down $3 at $1,173/1,178 although palladium edged $1 higher to $823/829.
(Editing by Mark Shaw)
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