Gold is stuck in a range ahead of jobs report

Bengaluru — Gold was range-bound on Friday as investors awaited the US jobs report for further clues on the economy, after the European Central Bank’s (ECB) dovish policy stance spurred the dollar against the euro, while the metal was on track for a second consecutive weekly decline.

Spot gold was up 0.1% at $1,286.91/oz as of 4.08am GMT. The metal, earlier this week, hit a more than five-week low and was down about 0.5% so far for the week.

US gold futures were also up 0.1% at $1,287.60/oz.

The dollar was holding near its new 2019 high posted in the previous session after the ECB postponed an interest rate hike until 2020 and offered banks a fresh round of loans to prevent a credit crunch that could worsen the EU’s economic slowdown.

“ECB decision echoed US dollar strength, and we saw risk aversion and, while the dollar rose US bond yields fell on safe-haven demand so, there was a bit of a conflict,” said Ilya Spivak, a senior currency strategist at DailyFX.

While falling yields make the nonyielding bullion more attractive, a stronger dollar makes it costlier for investors with other currencies.

The ECB announcement compounded worry of a global slowdown, helping bolster the overall sentiment for bullion, considered a safe store of value during times of economic or political turmoil.

Market participants are now waiting for the US nonfarm payroll report due later in the day for indications on the strength of the economy and how it would affect the Federal Reserve’s monetary policy.

“The market is very reluctant to commit to a direction especially on something that is going to shape the outlook on the Fed rates and dollar,” Spivak said.

Asian stocks also shuddered lower after the ECB slashed its growth forecasts, leaving investors fearing the worst for the global economy.

Meanwhile, US President Donald Trump on Wednesday said that trade talks with China were moving along well and predicted either a “good deal” or no deal.

“Strong nonfarm payrolls results and further positive developments in US-China trade talks are likely to drive gold down to $1,250/oz, which remains a key support level for gold,” OCBC Bank analysts said in a note.

Among other precious metals, silver was up 0.1% at $15.03/oz, after slipping to its lowest since December 27 in the previous session.

Palladium slipped 0.4% to $1,522.03/oz, while platinum was flat at $813.50/oz, after touching its lowest since February 19 at $806.50 earlier in the session. 

Reuters