The gold price tested the key psychological $1,100 level on Friday morning, nudged higher by weaker equity markets ahead of the blockbuster US jobs report.
Spot gold peaked at $1,097.70, just $2 short of a level it has not reached in a week. It was last up $2.30 on Thursday’s close at $1,095.50/1,092.30 per ounce. Silver was up one percent at $14.76/14.81, a 15-cent gain.
“Weaker equity markets were presumably the main reason why the gold price has been largely able to defy the increased rate hike expectations in recent days,” Commerzbank said. “If equity markets come under further pressure after the employment figures are published, this should preclude lower gold prices.”
All major US indices closed in negative territory on Thursday, with the Dow Jones industrial average ending at a six-month low. While Asian markets performed better overnight, European indices opened in negative territory.
The market is predominantly focused on the US jobs report, which could spark some volatility in currency markets and shed light on when the first US interest-rate rise in nearly a decade will take place. The dollar is almost unchanged for the session at 1.0920 against the euro.
The data point is one of the last key labour indicators that the Federal Reserve can use to gauge the status of the US economy before deciding whether to raise rates or not in September.
US non-farm payrolls are expected at 220,000, down from 223,000 previously, while growth in average hourly earnings is expected at 0.2 percent and the unemployment rate at 5.3 percent.
US interest rates have fallen precipitously since 2006; a rate increase would signal to market participants that the Fed is seeing enough growth to ignore a lack of inflation. Higher US interest rates could push many investors into more yield-bearing assets such as bonds, though much of the market believes that any prospective rate increases have already been priced in.
In other data today, German industrial production at -1.4 percent was well short of consensus of 0.3 percent, with the French figure at -0.1 percent. The German trade balance at 22.0 billion euros was also short of expectations, though the French figure was somewhat better than expected at -2.7 billion euros.
The PGMs continue to perform well – palladium was up $12 at $605/610 per ounce and platinum $4 at $951/956 – in light of increased pressure on global oil prices and robust vehicle sales in Germany posted earlier this week.
Last month, 290,000 new cars were registered, up seven percent on last year – the sharpest annual increase in one month so far this century, according to the German Association of the Automotive Industry.
“The buoyant new car registration figures should translate into robust demand for platinum and palladium, thus lending support,” Commerzbank noted.
(Additional reporting by Dalton Barker, editing by Mark Shaw)
The post Gold price gains on weaker equities; all eyes turn to US jobs appeared first on The Bullion Desk.
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