Monday, October 18

Gold hemmed in narrow range as investors eye US jobs data

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Gold prices edged higher on Friday but were stuck in a narrow range, as investors sought more direction from the US non-farm payrolls report, considered key to the US Federal Reserve’s stimulus taper schedule.

Spot gold rose 0.2% to $1,759.34 per ounce by 0320 GMT, trading in the range of $1,760.43-$1,752.27.

US gold futures were flat at $1,760.10.

Gold was finding support in Asia as local investors bought the precious metal to hedge for non-farm payrolls and weekend event risk, Jeffrey Halley, senior market analyst for Asia-Pacific at OANDA said, adding “gold’s fate will be determined by the non- farm payrolls print tonight.”

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“If we see a number above 500,000, gold is likely to resume its downtrend as markets lock and load December for the start of Fed taper, that will likely boost US yields and dollar.”

The dollar index held steady below recent highs. A stronger dollar makes gold more expensive for other currency holders.

Meanwhile, US 10-year Treasury yield rose to its highest since June.

According to a Reuters survey, US non-farm payrolls likely rose by 500,000 jobs in September. The data comes on the heels of a weekly report showing claims for jobless benefits dropped by the most in three months last week.

Fed Chairman Jerome Powell had signaled last month there was broad agreement among policymakers to begin reducing the central bank’s monthly asset purchases as soon as November, as long as the September jobs report was “decent.”

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

Elsewhere, spot silver fell 0.4% to $22.48 per ounce.

Platinum rose 0.5% to $983.87 and was up 1.2% for the week.

Palladium eased 0.2% to $1,956.17 but was headed for a weekly gain after declining for four. (Reporting by Eileen Soreng in Bengaluru; Editing by Krishna Chandra Eluri)

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