Gold traded in rangebound fashion on Friday morning, as is typical ahead of today’s blockbuster US employment report.
The spot gold price was last at $1,125.60/1,125.90 per ounce, little changed from Thursday’s close. Trade has ranged narrowly from $1,123.50 to $1,126.80 so far.
Gold took a tumble on Thursday on euro weakness after the European Central Bank trimmed its inflation and growth forecasts. ECB president Mario Draghi said the bank is prepared to extend quantitative easing programme beyond the end of September next year, which boosted equities but weighed on the euro.
The dollar index continues to climb yesterday – it peaked at 96.61 on Thursday and was last at 96.26, up from a low of 92.56 on August 24. The rebound in the dollar has been a headwind for gold since gold prices peaked on that day, FastMarkets head of research William Adams said.
The two-day holiday in China also had some bearing on the lack of demand, MKS noted. Chinese markets will remain closed until Monday after the September 3-5 celebrations to mark the allied victory over Japan in World War II.
Today’s US employment report could be crucial in determining whether the US Federal Reserve tightens policy and raises interest rates later this month – 215,000 non-farm jobs are expected to have been created, with the unemployment rate expected to ease to 5.2 percent.
“A robust labour market report could point to two interest rate hikes before the year is out, whereas a weak report could well mean no rate hikes at all this year,” Commerzbank noted. “The gold price should also react to the likely shift in the EUR-USD exchange rate.”
In data already released this morning, Japan’s average cash earnings climbed 0.6 percent, which was below what was expected, and German factory orders dropped 1.4 percent, having been expected to decline 0.5 percent.
The EU retail PMI at 51.4 was below the previous reading of 54.2. There is also a G20 meeting today and FOMC member Jeffrey Lacker is also speaking.
Meanwhile, inflows into gold ETFs continued – in the funds tracked by FastMarkets, holdings have increased to 1,534.32 tonnes.
As for the other precious metals, silver was little changed at $14.74/14.79 per ounce.
“The fall in the gold/silver ratio to 75.9 from 79.80 shows silver is playing catch-up with gold to some extent,” FastMarkets’ Adams said.
Platinum at $1,005/1,010 per ounce was unchanged while palladium at $578/583 fell $6. Palladium ETF holdings saw strong outflows – in the funds tracked by FastMarkets, holdings have fallen to 2,927,164 ounces.
(Editing by Mark Shaw)
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