The gold price was typically subdued in early Friday trading ahead of this afternoon’s blockbuster US jobs report.
Spot gold was last $3 higher at $1,186.70/1,187.50 per ounce, having traded in an $8 intraday range so far. Silver was up eight cents at $16.36/16.41, platinum $9 at $1,135/1,140 and palladium $11 at $787/792.
The complex shrugged off a stronger dollar, which at 1.1200 against the euro this morning was building on gains of 0.66 percent on Thursday after US weekly jobless claims at 265,000 were better than the forecast 277,000.
The focus has now turned to the blockbuster US non-farm payrolls data, which the market will dissect for clues to when the Federal Reserve will start to raise interest rates from near zero-levels. The US is forecast to have added 231,000 jobs in April after an unusually weak reading of 126,000 in March.
After the recent run of predominantly soft data and first-quarter GDP growth of just 0.2 percent, today’s figure could support or give lie to Fed’s belief that the slowdown is temporary.
“If the Fed becomes less confident about its optimistic appraisal, the first interest rate hike is likely to be further postponed, which would benefit gold,” Commerzbank said in a note. “Disappointing labour market data could thus drive gold up above the $1,200 per troy ounce mark.”
In another precursor to today’s data, the ADP figure on Wednesday at 169,000 was below the forecast 199,000. A higher number today, however, could underpin a surge in the dollar and ultimately dampen any near-term prospects for gold – particularly while many investors are building the case for a delay to any interest-rate rises.
In the European credit market, German 10-year bond yields surged on Thursday to around 0.8 percent at one stage, which placed pressure on holding gold.
INTL FCStone’s Ed Meir identified a rather clean reverse correlation between real interest rates and gold.
“As real rates go up, gold suffers, with the negative correlation being -89 percent,” he said. “The episode tells us that markets have ‘minds of their own’ and that there are no set trends that can be counted on to reliably stay in place. Moreover, when markets do turn, they do so at the most unexpected times.”
In earlier data, the Chinese trade surplus at $34.1 billion in March was up from $3.1 billion in February but below the expected $34.5 billion. As well, exports and imports both fell further than expected, raising the likelihood of fresh stimulus measures from Beijing.
German industrial production disappointed at -0.5 percent as did the German trade balance at 19.3 billion euros. But Italian industrial production at 0.4 percent was better than expected.
(Editing by Mark Shaw)
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